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Exhibit
99.1
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
C O R P O R A T E P A R T I C I P A N T S
David M. Mossberg, Investor
Relations
Todd Mitchell, Chief Financial
Officer
Randall K. Fields, Chief Executive Officer and
Chairman
C O N F E R E N C E C A L L P A R T I C I P A N T S
Robert Miller, UBS
Financial
Guy Riegel, Ingalls &
Snyder, LLC
Mark Stafford
P R E S E N T A T I O N
Operator:
Good
day, and welcome to the Park City Group Third Quarter 2017 Earnings
Call. Today's conference is being recorded. At this time, I would
like to turn the conference over to Dave Mossberg, Investor
Relations. Please go ahead, sir.
David M. Mossberg:
Thank
you, Noah. Before we begin, we will be referring to today's
earnings release, which can be downloaded from our Investor
Relations page in the Company's website at
parkcitygroup.com.
I also
like to remind everyone that this call could contain
forward-looking statements about Park City Group within the meaning
of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that are not subject to
historical facts. Such forward-looking statements are based upon
the current beliefs and expectations of Park City Group's
Management and are subject to risks and uncertainties, which could
cause actual results to differ from the forward-looking statements.
Such risks are more fully discussed in the Company's filings with
the Securities and Exchange Commission. The information set forth
herein should be considered in light of such risks. Park City Group
does not assume any obligation to update the information contained
in this conference call.
Throughout
today's call, we may be referring to both GAAP and non-GAAP
financial results, including free cash flow, EBITDA, Adjusted
EBITDA, net debt, net income, and earnings per share, which are
non-GAAP terms. We believe these non-GAAP terms are useful
financial measures for our Company, primarily because of the
significant noncash charges in our operating statement. There is a
reconciliation of non-GAAP results in our earnings release and on
the Investor Relations section of our website.
Our
speakers today will be Randy Fields, Park City Group's CEO and
Chairman, and Todd Mitchell, Park City Group's CFO.
With
that, I'll turn the call over to Todd.
Todd Mitchell:
Thank
you, Dave. We put up another strong quarter. Fiscal third quarter
revenue grew 33% to $4.8 million. This was in line with our
expectations for the quarter and puts us on track to achieve our
financial targets for the year.
Top
line growth was driven by revenue growth from our largest
ReposiTrak HUBs, year-over-year gains in supply chain revenue and
an acceleration in smaller supplier HUB sign ups.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Fiscal
third quarter net income was $900,000, up from $295,000 a year ago.
This was 19% of total revenue in the quarter, also in line with our
expectations. So far, this fiscal year, we have converted $3.5
million in incremental revenue into $2.8 million in incremental net
income for an incremental contribution margin of 80%. Clearly, this
demonstrates the operating leverage in our business model. We
remain confident that revenue and profits in the second half of the
year will be stronger than the first half and that we will exceed
the financial and operating targets we articulated at the end of
fiscal 2016.
Now
with regard to expenses. Total operating expenses were $3.8 million
in fiscal third quarter, up 17% versus a year ago. This was
expected. We said last Q operating expenses will climb a bit in the
back half the year. We are not a quarterly Company, so revenue and
expenses are going to fluctuate quarter-to-quarter. We are
investing where we believe it will translate into faster revenue
growth and improved operating leverage.
Specifically,
during the quarter, we expanded our account management team, we
initiated execution on our 10x project, and we launched
MarketPlace. While we talk about these investments in terms of
helping to drive revenue growth and operating leverage, what they
are really designed to do is to drive customer success because if
we are successful in helping our customer achieve their goals in
terms of getting their suppliers on the system faster and in terms
of getting them compliant more rapidly, then we will be successful
in achieving our goals for revenue growth. If we do this smartly,
our investments will lead to a level of automation, which will not
only enhance the efficacy of our offering to our customers, but
also drive operating lever and by extension
profitability.
Self-implementation
is the perfect example of this. We are tremendously focused on
getting to the point where all of our services can be
self-implemented by the customer. As we've seen in ReposiTrak,
where the majority of our HUB suppliers self-implement, you cannot
solve scaling by throwing a bunch of customer service reps at a
problem. You have to build a system where supplier can sign up and
get compliant on their own, then you hire customer service reps to
both maintain and build on that relationship.
This
quest for efficacy and efficiency is what 10x is all about, and its
what MarketPlace is all about. 10x is about giving our account
management team the information and tools they need to make sure
that suppliers are coming on the system and getting compliant
faster. 10x is about giving our finance team the information and
tools they need so that they can make smart decision and monetize
the account management team's activity efficiently.
Similarly,
Marketplace is about giving our HUBs the ability to find new
suppliers and new products on their own and giving our suppliers
the ability to find new customers on their own. During the quarter,
we saw one of our largest HUBs use Marketplace for sourcing
products and categories other than food. It was an instance where a
customer had a very specific business need, which they were able to
resolve on their own on our platform. This is how we define
success.
Now, I
will drill down into the expenses by component because I know you
want me to do that. But as I've said, these numbers will tend to
fluctuate from quarter-to-quarter as we invest in our
future.
Cost of
service increased 28% in the fiscal third quarter to $1.34 million.
This was primarily due to incremental expenses associated with the
launch of MarketPlace and to a lesser extent, some incremental
expenses associated with the deployment of our Vendor Portal with a
couple of large customers.
Sales
and marketing rose 7% in the fiscal third quarter to $1.35 million.
This was primarily due to an increase in our account management
team. This team has doubled its size over the past year, and we
will expect it will likey double in size again over the next
year.
General
and administrative rose $200,000 in the fiscal third quarter to
just over $1 million. This increase was primarily due to higher
consulting fees and investments associated with our 10x project. We
also saw a onetime increase in facilities expense as we moved down
a floor in the same building to get more space and a better layout
for about the same amount of rent.
Something
I want to emphasize with regard to cash flow and liquidity. We
ended the third quarter with $13.5 million in cash. This was up
over $2 million from just two quarters ago, due to a record $1.6
million in operating cash flow during the quarter. This was driven,
first and foremost, by growing revenues and profits, but also from
a drop in accounts receivable as our large central build HUBs
settled into a regular billing cycle as we said would be the
case.
Going
forward, we expect to generate strong top line growth in the 25% to
35% range, to see an even greater increase in bottom line
profitability and for a relatively high percentage of net income to
convert into operating cash flow.
That
concludes my review of the financials for fiscal third quarter. Now
I will turn the call over to Randy for more exciting qualitative
update.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Randall K. Fields:
Well, I
don't know that it's more exciting. Okay, well, I apologize, I'm
going to read my remarks again today. That constrains me a bit, but
we'll get to questions later, and I'll try and add some color as I
go through to these prepared remarks.
Important
to recognize for those of you who are new to listening to these
conference calls that I am almost impossible to satisfy. It's just
not in my nature. Having said that, the fact is it was a terrific
quarter by anybody's standard. The financial results were very
strong that generated 33% year-over-year revenue growth made
even—me smile. We had record operating cash flow, that's
critically important. As Todd pointed out, we ended up with $13.5
million of cash in the balance sheet, up a couple of million
dollars from just two quarters ago.
When we
look at that number and for those of you who've been around for a
while and look back on where we were just a few years ago, that
should certainly bring a smile to your faces as it does to mine. As
we look to the future though, we see some pretty incredible
opportunities to continue to grow our business.
Fundamentally,
we have the opportunity to do business with absolutely everyone who
touches food in the global supply chain for food, which is, as we
all know, the largest FIC code in the world. Importantly though, we
also have the opportunity to increasingly sell more and more
value-added services that help each of the participants in that
supply chain as we fondly say Sell More, Stock Less, See
Everything™ that happens with their trading partners. In
other words, we expect that the network effect is beginning to take
hold and will drive our business substantially over the next
several years.
To
address the opportunities ahead of us, during this quarter, we
continue to grow both the scale and the scope of this network. It's
a word you're going to hear us use more frequently going forward,
the idea that we're building out a very interesting
network.
We
increased our base of largely, call them, Tier 1 HUBs, which would
consist primarily of retailers and wholesalers. Important to note,
although we're doing it quietly at this point, we're now doing
business with three of the five largest food retailers as chains in
the United States.
We
launched our Vendor Portal with two of our largest customers, and
we saw a dramatic acceleration of supplier HUB, that's kind of a
Tier 2 HUB as we would think about it, supplier HUB sign-ups. We
did all of that while putting an enormous amount of energy and time
and investment into the future, specifically the launch of
Marketplace, which exceeded our expectation. Think of MarketPlace
as an investment ultimately in our revenue structure. As Todd
eloquently spoke to, the successful initiation of the 10x project,
which is an investment in both our cost structure and our quality
of service.
So, let
me add a little bit of color to all of that, the ReposiTrak update.
As I mentioned, we're seeing a positive network effect with
ReposiTrak as its momentum continues. ReposiTrak is now clearly the
industry standard for food safety and Compliance Management. It's
not just from endorsements from the industry anymore, the trade
associations that have endorsed us. It's really increasingly the
names on our customer list.
As I
suggested, we signed the third of the top five food retailers in
the U.S. during the quarter. We added two other large and very
influential—think of them as thought leader HUBs from retail
during the quarter. We saw a dramatic acceleration in the supplier
HUB sign-ups. People are talking about us literally today at a Food
Safety Summit. One of our customers gave a presentation, and it was
in fact standing room only, to hear about us. So, it’s
happening. We're getting people talking about us. We're getting
people using the system, and that, in turn, is leading to more
sign-ups. It's fair to say the business is literally coming our way
or you can think about it as being pushed our way.
Our
success has really also being driven by a dramatic increase in
sense of urgency at the HUBs. When we first got into this whole
food safety Compliance Management a few years ago, it was
intriguing to people. It was different. It was something that
people knew it was important, but not urgent. I think it's fair to
say that there's been a sea change in the mentality around what we
do, the risks associated with the business not just the regulatory
risk, but the torque risk, and the consequences that there is now a
sense of urgency that didn't exist a few years ago.
What
that translates to is that our HUBs want to move faster in almost
every respect, and the change, frankly, is palpable. All of us
inside the business feel it. It had a tremendously positive impact
on our scaling. You see that in our revenue and our connections.
HUBs, though, are increasingly thinking of us as a strategic
partner, and we're going to come back to why is that important.
That, in turn, is helping to create this positive network effect as
we refer to it, as we extend our reach from farm to
fork.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Our
success is, as always, reinforced by our excellence in execution.
We're constantly improving on that. The rate at which we, today,
bring a HUB online to begin to get it compliant is remarkable
compared to where we were a few years ago. In fact, interestingly,
as I look back on the year in one of the quarters this year, we
actually brought on more spokes or connections in that quarter than
we had in the previous three years cumulatively. So, we're scaling
the business, and at the same time, we're doing a better and better
job for our customers. Remember, for those of you who've been
around for a while, the obsession of this Company and the culture
of this Company is really predicated on the idea that our customers
come first. Their needs, their desires, their success comes ahead
of our success. What we get out of it as shareholders is derivative
of the success that we generate for that customer set, and that's
working. Our customers know that we care about them. They're
appreciative of what we do, and they are talking about us in a very
positive way in the marketplace.
So,
we're doing that, though, because we're constantly focused on how
we can enhance our capabilities. As Todd mentioned, we're
increasing the size of the account management group that gets our
HUBs compliant, but at the same time, we're focusing in the sense
on both their productivity, their processes, the tools that they
need via this 10x project that we talked a lot about and it will be
on going for a number of years.
Importantly,
during the quarter, we launched Vendor Portal with two of our
largest customers. As we mentioned, we used to refer to this as
convergence. In the sense, getting two of our largest customers to
move into this Vendor Portal really completes, if you will, this
convergence effort on our part. For us, the Vendor Portal is really
a unified service delivery platform. God, that's a mouthful, a
unified service delivery platform that enables our supply chain and
ReposiTrak products to be self-implemented, picked by the customer,
chewed in bite-size pieces, if you will, and the net result is that
it's been very exciting internally to see both the technological
progression and the sales progression to a fully integrated
end-to-end platform that starts with Compliance Management in
ReposiTrak and ends with the MarketPlace with supply chain in the
middle of all of that. So, the artificial barrier of having legacy
supply chain business and new ReposiTrak business is now
evaporating at a very rapid rate.
Our
Vendor Portal was deployed with, in particular, the adoption of
what we call item level Compliance Management, and that's exactly
what it is. It is to say that, increasingly, when you think about
the problem with Compliance Management, ReposiTrak initially was
geared to the idea of vendor, think of it as corporate level
compliance. That means the Company does it have insurance, does it
have a W-9, things like that. Then facility level compliance, think
of that as do they have a successful SQF audit? Have they had any
FDA problems? Now what we're finding just as we guessed was our
customers are increasingly interested in the attributes and
compliance of individual products that are made by companies by
facilities. An example of that are the sort of social attributes
that we see on television and radio and they're talked about a lot.
For example, GMO, non-GMO, organic, natural, etc. All of those
kinds of things are now areas of compliance that our customers are
increasingly interested in.
To us,
it means an opportunity to push ourselves deeper and deeper into
our customers' business problems and help them overcome those
problems. Obviously, it results from our perspective in both better
long-term customer relationships and frankly, increased revenue for
us so that the revenue per connection and revenues that we derive
from our HUBs go up. But what it really means is, that we're
resolving more and more problems that our customers bring to
us.
I
mentioned and it's important to note that we saw a dramatic
acceleration this quarter with what we call supplier HUB sign-ups.
These are important because in the long run, there are literally
hundreds and hundreds and hundreds of thousands of these suppliers
who adopt ReposiTrak for their supply chain. That's specifically
what we mean by a supplier HUB. A supplier then—typically,
what we're finding is has used ReposiTrak because they were
required to by one of their customers, a retailer or a wholesaler.
They, in turn, then use the system and asked themselves the obvious
question, "Why wouldn't I use this for my own supply chain? Why
wouldn't I adopt ReposiTrak not, if you will, as they spoke or a
supplier, but why wouldn't I use it for my own supply chain?" We've
seen a significant uptick in the number of how our users as
suppliers picking up ReposiTrak and driving us deeper and deeper
into the supply chain.
In
fact, this quarter, interestingly enough, quick story, we have a
very large, well, think of this company as one of the largest
specialty fruit and vegetable produce broker distributors in
America. They were required by some of their retail customers to
use ReposiTrak. A couple of years ago, the COO of the company went,
"Well, why don't I do this for my supply chain?" It was adopted by
that company. Well, the next thing you know is that's one level
down. Some of their suppliers have begun to use the system for
their supply chains. So, now we're three and four levels down,
which creates a compliance network if you think about it that
extends all the way from the retailer shelf right down to the farm
where the produce is, in fact, grown. We think that visibility is
increasingly important to the marketplace, to consumers, and that,
ultimately, we believe it will drive our adoption at an even more
rapid rate in the future.
MarketPlace.
Wow. This quarter, we launched MarketPlace. For us, MarketPlace is
really a compliant vendor sourcing system. It was developed,
frankly, after we discovered that between 15% and 20% of all of the
vendors that we saw in our system were either unable or unwilling
to become compliant for their customers. What that leads to is the
need to replace those vendors because of the risks associated with
doing business obviously with people who either will not or cannot
become compliant.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
So,
MarketPlace is really a service that allows HUBs to find new
compliant vendors to replace kind of the bad actors that they have
to deal with today, and it's also a place for compliant vendors can
find themselves new buyers of their products. Well, what happened
is that, in fact, the Company put an enormous amount of time and
energy, I'm not sure we've ever done a launch that has this many
different pieces of our business focused on that launch as we did
with MarketPlace. So, I think it's fair to say it was our biggest
single effort ever executed by the Company, but reception has been
remarkable so far. We're still in development. We only have one
buyer in the system. Turns out that buyer is one of our largest
customers. They're using it in ways that we would not have
expected. At this point, it's all non-food. There's a surprise
inside the system, so it goes far beyond food. So far, the feedback
is pretty extraordinary. In fact, within two hours of the press
release that went out on the announcement of MarketPlace, I had
received four phone calls from our HUBs, from some of our largest
HUBs, saying they wanted to use this site unseen.
So, I
think in the long run, it's fair to say that MarketPlace is likely
to be a big hit. We don't know how big. We think internally that it
will be a very important adjunct to our business over the next
several years, but I want to be clear that it's certainly not a
profit contributor at this point. There’s lots of development
work to be done, and it is the kind of business that we think over
the next several years, years, not quarters, years, let me say it
one more time, years, over the next several years, Marketplace will
become central to what we do, and we’re going to continue to
invest in the future.
So,
wrapping this all up, the fiscal third quarter results really built
on the momentum that we reported in the first half and certainly
suggest that just as we have thought that this is going to be a
pretty amazing year for us financially. We continue to expect
revenue profitability and operating cash flow in the second half of
the year to exceed the first half of the year. Stay tuned, by the
way. You're going to hear an interesting number here in a moment.
So, don't tune out yet. We've brought a number of new very exciting
products and services to the market this year. I think we've had
four or five new products. We've only talked with you about a few
of those, but there's actually been some additional product
introductions, and we'll talk more about those in the next
call.
Okay,
here comes the key point here. We're still not a quarterly company,
please remember that. This quarter, we had 33% revenue growth. It's
reasonable though in the quarter that we've entered to expect
revenue growth to exceed 40%. So, this will be a terrific second
half of the year. This is going to be a fabulous quarter that we're
in now. But longer term, we do expect our top line, as far as we
can see, to grow 25% to 35% a year. Some years, it will be 25%,
some might even be higher than 35%. But 25% to 35% is pretty much
the trajectory we see ourselves on.
We
expect that rapidly growing revenue base to support progressively
higher operating margins. We're going to continue to add cash to
our balance sheet. Our larger customers want to be comfortable
because they think of us as long-term partners, not short-term
partners. So, things are exceptionally good, frankly, looking out
from where we are, it should only get better.
Okay.
Thank you, guys, for your interest. Thanks for the support, and now
we'll take a few questions.
Operator:
Thank
you. Ladies and gentlemen if you would like to ask a question
please signal by pressing star, one on your telephone keypad. If
you're using a speaker phone please make sure your mute function is
turned off to allow your signal to reach our equipment. Again,
that’s star, one to ask a question and we’ll pause for
just a moment to allow everyone an opportunity to signal for
questions. Once again that’s star, one for questions. Star,
one if you would like to ask a question.
We'll
take our first question from Bob Miller with UBS
Financial.
Robert Miller:
Hi,
Randy.
Randall K. Fields:
Hi,
Bob.
Robert Miller:
So,
operating expenses went up about $400,000 sequentially, and that
was to support growth, the MarketPlace and account reps and so
forth. Is that something that should start growing much slower here
in the coming quarters? Or should we just expect that to keep going
up rapidly to support your growth?
Randall K. Fields:
Good
question, Bob. The way—again, we think about this as we're
not a quarter-to-quarter Company. So annually, we would expect our
expenses versus our revenue to be significantly lower. But in every
given quarter, there may be increases. So overall for the year,
we're going to—as you know, quarters one and two were small
increases, quarter three was larger, but the year will be quite
comfortable in relation to the top line growth. We're obviously on
a trajectory, I guess, year-to-date, we're probably—I'm just
thinking 30—I'm looking at my CFO, 34% to 35% top line, and
expenses are probably 10%, 7%. Call me crazy, but I think that's
the way we'd like to see it. So, the goal is to invest
conservatively, but to make sure that the level of support that
we're giving our customers for their success is
appropriate.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Robert Miller:
Okay.
When you talk about the MarketPlace being an important contributor
not in the quarters ahead, but years ahead, how do you monetize
that?
Randall K. Fields:
The
truth is we see several paths to the monetization of the
MarketPlace. At this point, those are not things that we really
want to talk about publicly. We're still working on them internally
between our HUBs and our suppliers. But in the very long run, we
think the MarketPlace is central to what we do. In a way,
historically, we've grown by using our technology to help our
customers see their problems. We call that visibility. Then from
seeing their problems, we've made it our responsibility to help
them with the solution to those problems. So, in a way, we feel
there's obligation, if you will, that having exposed this problem
in the industry where 15% to 20%, possibly even more of the
suppliers, are—let's, at this point, say they're suspect. We
just don't know. They won't give us information or they do give us
the information, and it's scary.
We, in
essence, have uncovered a problem for the industry, which are
non-compliant suppliers, and I can tell you that one of our largest
customers basically now have T-shirts for people in the office that
say if you do not comply, you do not supply. But the problem is how
do they go find all of the good kinds of suppliers, the good guys
that they should be doing business with, and that's what
MarketPlace is about. So, we're going to enter this territory. I am
sure that we—one of the methods that we see or more for
monetization of the MarketPlace will be put in place. But for now,
we just want to see what the adoption rate is like, get it right
and get it up and running in a way that's
self-sustaining.
Robert Miller:
Okay.
You mentioned that this was one of largest undertakings that the
Company has committed to, and that there's a still a lot more
investment and work left to be done on that. So, could your kind of
give us a little more flavor of exactly what that
means?
Randall K. Fields:
Yes,
it's not—that probably sounds like a financial commitment.
It's not as much financial as it is time and focus for multiple
groups. Let me give an example. Because this is very different, the
MarketPlace is very different from anything we've done, we had to
involve the whole sales organization so they could learn the
product well enough to talk to suppliers and HUBs about it. We had
to create training for the support people. We had to create, if you
will, a whole new system internally for reporting problems around
it. We had marketing involved in it. We had training involved in
it. So—and that's all, aside from development. Interestingly,
the major cost element has not been development, it's the focus of
every other group of the Company on the MarketPlace to hold the
hands of each other and customers to be sure that adoption goes
properly. So, it's really a focus issue, it's not a pure financial
issue.
That's
going to continue for some time until we get everybody inside the
business comfortable with this idea of MarketPlace until we start
getting buyers and sellers together on a way larger scale than we
do today. We think at that point, much like ReposiTrak, it becomes
a network enabler. The network of buyers and sellers tends to
create more buyers and sellers. So, it's pretty exciting
internally, it's just taking—getting more groups of people
focused on this than anything we've ever had to do
before.
Robert Miller:
Okay.
One more question. You said your first customer is on MarketPlace
now, and they're using you for non-food items. So, that just sounds
like a contradiction of what MarketPlace is. So, what is
MarketPlace?
Randall K. Fields:
No, no,
not at all. Remember, we didn't say unsafe food. We said
compliant.
Robert Miller:
I'm not
implying because you're using not—you said that they were
using it for non-food items or not.
Randall K. Fields:
Remember,
first of all, ReposiTrak covers more than just food. Basically, if
you are a vendor, if you are a service agent, if you service
refrigeration in the store, there are compliance standards that you
have to adhere to do business with one of our HUBs. You have to
have workman's comp as an example. So, we don't just cover food
safety, we cover compliance of all vendors against all criteria
that a HUB, if you will, retailer or wholesaler would establish for
his supply chain, including service centers. So, the reality here
is that non-food items are definitely going to be a major part of
the MarketPlace just as food items will. We just wanted to note
that it was interesting that the first transactions inside of
MarketPlace have been non-food.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Robert Miller:
Okay.
Can you give us a couple of examples of what those
were?
Randall K. Fields:
Everything
from Haitian flags to beach towels to water bottles. So, it would
not otherwise imagine would be under our purview. So, it's been
very—it's really been intriguing.
Robert Miller:
All
right. That’s all I have. Thank you.
Randall K. Fields:
Thanks,
Bob.
Operator:
As a
reminder ladies and gentlemen, it is star, one if you would like to
ask a question, star, one, we’ll pause briefly.
We'll
take our next question from Guy Riegel with Ingalls and
Schneider.
Guy Riegel:
Hey,
guys. How are you?
Randall K. Fields:
Good.
Guy Riegel:
Good,
good. Hey, just getting back to MarketPlace, and somebody, one of
your main clients has signed up for it and is using it. How is it
populated? Meaning, let's say, Randy, you're using Todd as a
supplier of food and it comes out that he's non-compliant. So, now
you got to look for somebody else. How do you populate kind of the
MarketPlace?
Randall K. Fields:
Guy,
that's a good question. It's a bit counterintuitive. So, stay with
me. Let's make it more complex than your instance. Meaning, let's
suppose I have three different buyers, three different retail
companies in the MarketPlace. Each of those companies has different
compliance standards than the other. There is no concept of
compliance. It's a relative concept. So, an example might be, I
require $5 million of liability insurance and $1 million umbrella,
and I require an SQF audit. You might have somebody else that
requires $10 million and no SQF audit. So, in—what the
MarketPlace does is it takes to look at a supplier who would
achieve your compliance standard as oppose to "the compliance
standard," which don't exist. I would tee that supplier up for you
to do business with because he is, to you, a good guy. That make
sense?
Guy Riegel:
But how
do I know about that supplier or that vendor who meets my
standards?
Randall K. Fields:
Yes,
you literarily would go into the MarketPlace. Think of it as it's
almost Amazon-like. What you would do is—let's suppose you
are looking for and making this up, of course, a tomato paste
vendor. So, you would type in tomato paste, and the system would
return to you vendors who achieved your criteria. So, it would tell
you tomato paste vendors in the system that in fact—and they
will have self-implemented. They will put all of their product
level information in, etc., and now you will see, just like on
Amazon, the vendors that you could do business with.
Guy Riegel:
Is it
the concept of if I'm the tomato paste vendor and I have signed up
for ReposiTrak, are you going to allow me to check a box to say you
can also sign up for MarketPlace?
Randall K. Fields:
Bingo.
Guy Riegel:
In that
scenario, are you getting paid twice?
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Randall K. Fields:
Well,
not really. At this point, there's no incremental charge to be in
MarketPlace because we want to increase the sales of our users, and
we want to solve the problem of our buyers because they really have
a tough job ahead of them to find good suppliers to replace
suppliers that aren't as good. So, no...
Guy Riegel:
How do
you get compensated? How does MarketPlace then make
money?
Randall K. Fields:
What I
said a little bit ago was we don't want to discuss all of that at
this point. We see several paths to interesting revenue
opportunities for us. But at a minimum, if you, in fact, find a
connection, so you're a buyer and you suddenly start doing business
with a new supplier, that becomes at a minimum, a new connection.
So, worse case, we end up with additional connection revenue as we
do today. So, that's the worse case, but we think there are some
other interesting cases beyond that as well. We just don't want to
talk about it.
Guy Riegel:
Got it
okay, thank you so much.
Randall K. Fields:
You
bet, thanks Guy.
Operator
We'll
take our next question from Mark Stafford with (Inaudible)
Capital.
Mark Stafford:
HI
Randy.
Randall K. Fields:
Hi
Mark.
Mark Stafford:
When
you were talking about MarketPlace, I was just thinking about the
other businesses with pharma and insurance and some of those other
areas you touched on in the past calls. Anything new in those
areas?
Randall K. Fields:
Yes, a
little bit of an update. The insurance thing is getting to
be—remember, let's go back—well, first, let me deal
with pharma. We're just not going to do it. I just don't have the
patience. I've expressed that. It's almost a personal thing because
it's lawyer-driven, it is so slow, so slow to adopt, so peculiar.
We're just not emotionally cut out for that. So, we're not just
going to continue to invest effort against pharma at this
point.
But on
the insurance side, that's moving relatively well. What's happening
is just as we would want, we now have one of the largest insurance
companies in the world saying to its customers who are retail HUBs
and wholesale HUBs, if you will, that if you are a ReposiTrak user,
we're going to improve on your insurance rate. So, that's beginning
to have a pretty interesting impact. It's still early, but we were
able to get over the goal line with one of the largest insurance
companies on planet Earth. Now what we want is we're moving that
along inside some trade associations, etc., but the insurance part
of our business, meaning the idea of rewarding people for being
good citizens is going very well.
Mark Stafford:
Okay.
Thanks.
Park
City Group - Third Quarter 2017 Earnings Conference Call, May 10,
2017
Randall K. Fields:
You
bet.
Operator:
At this
time, we will conclude the question-and-answer session. I'd like to
turn the call back over to management for any additional or closing
remarks.
David M. Mossberg:
Thank
you all for your interest in Park City Group. Our phone number is
at the bottom of the press release. Feel free to reach out if you
have any additional questions.
Operator:
That
does conclude today's conference. Thank you for your participation,
and you may now disconnect.