Q4 2022 Park City Group Inc Earnings Call PARK CITY Sep 29, 2022 (Thomson StreetEvents) -- Edited Transcript of Park City Group Inc earnings conference call or presentation Wednesday, September 28, 2022 at 8:15:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * John R. Merrill Park City Group, Inc. - CFO * Randall K. Fields Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales ================================================================================ Conference Call Participants ================================================================================ * Thomas Ferris Forte D.A. Davidson & Co., Research Division - MD & Senior Research Analyst * Rob Fink;FNK IR;Managing Partner ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Greetings, and welcome to Park City Group Fiscal Fourth Quarter 2022 Earnings Call. (Operator Instructions) And please note that this conference is being recorded. It is now my pleasure to introduce your host, Rob Fink with FNK IR. Thank you, Mr. Fink. You may begin. -------------------------------------------------------------------------------- Rob Fink;FNK IR;Managing Partner, [2] -------------------------------------------------------------------------------- Thank you, operator, and good afternoon, everyone. Thank you for joining us today for Park City Group's Fiscal Fourth Quarter Earnings Call. Hosting the call today are Randy Fields, Park City Group's Chairman and Chief Executive Officer; and John Merrill, Park City Group's Chief Financial Officer. Before we begin, I would 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 on current beliefs and expectations. Park City Group remarks is subject to risk and uncertainties. Actual results may differ materially. Such risks are 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 information contained in this conference call. Shortly after the market closed today, Park City Group issued a press release overviewing the financial results that will be discussed on today's call. Investors can visit the Investor Relations section of the company's website at parkcitygroup.com to access this press release. With all that said, I'd now like to turn the call over to John Merrill. John, the call is yours. -------------------------------------------------------------------------------- John R. Merrill, Park City Group, Inc. - CFO [3] -------------------------------------------------------------------------------- Thanks, Rob, and good afternoon, everyone. We are a SaaS company. The success of our transition to a SaaS company is clearly evident in our profitability. We increased our income from operations by 52% even as our consolidated revenue decreased due to the planned elimination of essentially all nonrecurring revenue. This resulted in a significant increase in net income, excluding the forgiveness of our PPP loan last year. We are systemically profitable with now 20-plus consecutive quarters of GAAP profitability despite a market cycle, a global pandemic and a looming recession. Our strategy remains very simple: grow recurring revenue, control costs, increase net income, accelerate EPS, buy back shares and drive cash. Recurring revenue grew 6% for the year and 8% for the quarter. We ended the quarter with an exit rate of annual recurring revenue of $19 million. That means signed contracts in hand at June 30, 2022, that are billed monthly, multiplied times 12 will generate $19 million in recurring revenue in the subsequent 12 months if we just stand still. Simultaneously, we have controlled costs and increased productivity, reducing our annualized cash spend to approximately $11.8 million or 66% of our annual recurring revenue. What do I mean by productivity? Instead of using someone else's software, we built our own tools, including artificial intelligence capabilities to facilitate these tasks efficiently and tailored for our specific needs. The result of expansion of our ability to focus on customers, reduction in third-party software costs and continued improvement in internal productivity. As a result, our business is now quite easy to model. If you take our annual recurring revenue exit rate, call it $19 million and add our target growth rate of 10% to 20%, it is pretty easy to determine our likely revenue in the next 12 months since we are effectively 100% recurring revenue with little customer churn. This does not consider any future opportunities, including traceability or other initiatives. As I have said before, it takes approximately $12 million in cash to run this place. In my view, cash spend and cash generation is more meaningful in determining the health and sustainability of the business. Cash spend excludes noncash accounting costs such as depreciation, amortization, bad debt expense, stock compensation expense and other noncash accounting costs. As we have said before, going forward on each incremental recurring revenue dollar over and above our fixed cash cost of roughly $12 million per year, $0.80 to $0.85 will fall to the bottom line. You can already start to see this materialize with an 84% gross margin in the quarter and $6.1 million generated from cash from operations during the fiscal year. In other words, our profitability continues to grow substantially faster than revenue. The earnings power of the company is now clear and easy to model. It is also significant. Turning to the quarterly numbers. Fiscal year 2022 fourth quarter revenue was $4.6 million, down 21% from $5.8 million in the same quarter last year. The decrease was due to the planned reduction of $1.5 million in onetime revenue like marketplace products that surged during COVID and other recurring revenue products and services that were noncore and eliminated. This frees up resources prepared for one of the largest opportunities in Park City Group's history, meeting the FDA's food traceability standards. Recurring revenue as a percentage of total revenue was 99.9% for the quarter. As I have mentioned, recurring revenue in the quarter grew 8% over the same period of fiscal 2021. Total operating expenses decreased 35% from $5.3 million in Q4 2021 to $3.5 million in Q4 2022. The decrease is due to lower marketplace costs associated with lower marketplace revenue, elimination of noncore revenue and its related costs and continued expense discipline. Sales and marketing expenses increased slightly to $1.3 million in Q4 2022 as a result of higher sales travel for trade shows as COVID travel restrictions abate, and customers are reengaging with in-person meetings. This is partially offset by other cost reductions. G&A costs were down 14% to $1.2 million due largely to the elimination of third-party vendor software and lower overall general overhead. For the fourth quarter of fiscal 2022, GAAP net income was $1.1 million or 24% of revenue versus $480,000 or 8% of revenue. So for the fourth quarter in a row, we have essentially doubled our net margin, nearly tripled this quarter. Net income to common shareholders was $950,000 or $0.05 per common share based on 19 million weighted average shares versus $333,000 or $0.02 per common share based on 19.8 million weighted average shares. As of September 28, 2022, 18.46 million shares of the company's common stock was outstanding. You'll note we have reduced our capitalization by over 8% for the repurchase and retirement of shares, which I will touch on in a minute. Turning to the full year numbers. Fiscal year 2022 revenue was $18 million, down 14% from $21 million in the same period last year for the reasons I already discussed. Recurring revenue as a percentage of total revenue was 97% for the year or $17.9 million. This is a 6% increase over the same period in fiscal 2021. Total operating expenses decreased 25% from $18.1 million for the year to $13.6 million. Lower overall operating expense was the result of primarily lower marketplace costs and elimination of noncore spending and across-the-board reduction in total SG&A expenses. Sales and marketing expenses decreased from $5 million in 2021 to $4.9 million in fiscal 2022. The reduction in sales and marketing expense was largely the result of lower commissions due to lower revenue. G&A costs were down 10% to $4.7 million. Lower G&A costs were the result of lower rent expense due to cutting our office space in half from 10,000 square feet to 5,000 square feet, lower bad debt expense, elimination of third-party vendors and lower overall general overhead. Income from operations was up 53% to $4.4 million. Full year GAAP net income was $4 million or 22% of revenue versus $4.1 million, inclusive of a $1.1 million gain on the forgiveness of our PPP loan in 2021. Excluding the gain, our year-to-date net income last year was $3 million or [48%] of revenue. Net income to common shareholders was $3.4 million or $0.18 per common share versus $3.5 million or $0.18 per common share. Again, the prior year period includes the impact of the $1.1 million PPP gain on loan forgiveness. Turning now to cash flow and cash balances. For the year, we generated cash from operations of $6.1 million compared to $5.4 million last year, an increase of 13%. Total cash at June 30, 2022, was $21.5 million compared to $24.1 million at the end of fiscal year 2021. We continue to repurchase our shares with a combination of cash and our line of credit. The company now carries approximately $2.6 million on its revolving line of credit. Last year, that balance was $6 million. In the fourth quarter, the company repurchased 192,747 shares at an average price of $4.78 per share for a total of $920,000. During the fiscal year, we repurchased $6.2 million in common stock. Since inception of the buyback program, the company has repurchased a total of $10.2 million worth of stock retiring 1.71 million shares, hence reducing capitalization of over 8.3% since 2019. During this fiscal 2022 Board meeting, members increased the buyback by an additional $9 million. The company has approximately $10.2 million remaining on the $21 million total buyback authorization since inception. We are a SaaS company with over 28,000 customers, little churn, 100% recurring revenue and 80-plus percent gross margins. We have a fortress balance sheet, including $21 million in cash, little debt and a shrinking capitalization. Because of our systemic profitability, cash generation, strong balance sheet and line of sight into recurring revenue and cash spend, the company is in a position to expand on its capital allocation plan to facilitate returning capital to shareholders. What do I mean by this? Simply put, we have what I call levers. Number one, continue to grow cash in the bank. A strong balance sheet gives peace of mind to our customers and rising interest rates yield higher interest income and hence higher EPS. Two, continue to opportunistically buy back common stock, less shares outstanding means higher EPS, all things being equal. Number three, pay down debt. As interest rates rise, so does interest expense on debt. We may choose to continue to pay down debt. You have already seen the reduction from $6 million in 2021 to $2.6 million in fiscal 2022. Number four, pursue M&A activities, the company is acquisitive. As the economy compresses valuations may become more reasonable for a bolt-on or as an entrance into a new vertical or add additional customers. Number five, retire the preferred. Number six, finally, issue a cash dividend. In September, the Board of Directors determined that it is appropriate time to return capital to shareholders via a quarterly cash dividend. Accordingly, the Board of Directors declared a quarterly cash dividend of $0.015 per share or $0.06 per year, payable to shareholders of record on October 17 and to be paid on or about November 15. Based on the closing price on September 26, 2022, this represents an annual dividend yield of approximately 1.06%. Subsequent quarterly dividends will be paid within 45 days of the shareholders of record date of December 31, March 31, June 30 and September 30. From time to time, the Board may increase the dividend depending on what lever is more favorable to shareholders at that time. Therefore, we intend to allocate a meaningful portion of our free cash flow to returning capital to shareholders through an ongoing dividend, opportunistic share repurchases and the other levers I have outlined in our capital allocation plan. That's all I have today. Thanks, everyone, for joining. At this point, I will pass the call over to Randy. Randy? -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [4] -------------------------------------------------------------------------------- Thanks, John. As John noted, our net income is accelerating and our earnings per share is accelerating even faster. We have built a consistent cash generation machine with now more than 20 consecutive quarters of GAAP profitability. This has been and will continue to be our plan. The progress has created interestingly some additional value creation opportunities for us, as John mentioned, and this is in addition to our largest opportunity to date, traceability, which, by the way, is right around the corner. I'm happy with where we are strategically and operationally. However, we have much more to do and much more to deliver. Each part of our core business is growing. In particular, our compliance business is growing, and this is the part of our business that ties perfectly into traceability. Our forecast don't anticipate track and trace revenue until fiscal 2024 due to the fact that there is currently a proposed 2 year implementation window that the FDA has initially suggested. However, in interest earlier than we expected. To be clear, this is only from early adopters since frankly, industry remains painfully low. The industry actually doesn't recognize what is coming to this point. And over the next couple of quarters, early adopter revenue is unlikely to move our needle. But the fact that we're seeing potential revenue assume, which is nearly a full year early, is certainly urging. Traceability has been a long time coming, 11 years, in fact, FDA started, stopped and it finally took a lawsuit to push them to accelerate this initiative. But as a result of the lawsuit, the rules will be published in November. We then expect litigation to change the requirements, especially the short time lines. But the likely outcome is that ultimately Rule 204 will become effective in phases over the next few years. When the Food Safety Modernization Act, FSMA, as we call it, was rolled out and Rule 204, by the way, is part of FSMA. The largest firms were given the shortest time lines, smaller firms a little bit longer. And that worked out well in our view. And I want to be clear, it's better for us and much better for the food industry if this extremely complicated rule is phased in. For example, more than half the grocery stores in this country are individually owned, independent grocers are actually still more than half total market. So just imagine, if over 2 years, 18,000 independently owned supermarkets need to adopt a complex solution and simultaneously have no technical resource in-house. It will be chaos in the industry, including us. The larger chains want this capability, irrespective of the requirements and the (technical difficulty) driving compliance through their supply chains. This will make it easier for the smaller, call them, independent supermarkets to comply as many of their wholesalers and distributors will already be using our system. If the FDA phases in a rollout with larger retailers facing a shorter compliance time line and smaller retailers given more time that will work wonderfully for us. The larger wholesalers we expect will push the solution for us. Their suppliers will sign up, and that will effect to provide a pull for smaller retailers to use our solution. Even more encouraging is our recently announced partnership with National Grocers Association, which represents most of the independent grocers and more than 20,000 stores nationwide. The NGA recognizes the impact that the FDA's new rules will have on the industry and certainly appreciate how challenging the requirements will likely be for their members. ReposiTrak has always enjoyed industry endorsements but those have been usually pretty passive. But for track and trace, the NGA is actively helping us in marketing to increase awareness of this particular situation and certainly then of our capabilities to effectively deal with it. In fact, webinars with the NGA are starting this quarter. In addition, we're working with the NGA to develop some mechanisms that will allow an easier rollout of traceability to the industry and to their members. By the way, and I think most people are not thinking this way, this traceability rule will affect not only the grocery supply chain, which has 40,000 stores, but at least 185,000 QSR, quick service restaurants are called, 500,000 full-service restaurants and food service locations and at least 150,000 convenience stores. So let me add that up. Nearly 1 million places could be touched by Rule 204. This undertaking is massive, to say the least and most have absolutely no idea that is coming and, in fact, are naive in terms of the scope of the mandate. Make no mistake about it, this is a very big deal. Simply put, this is the largest single imposed change on the global supply chain for food in history by a large margin, period, [full stock]. Keep in mind, initially Rule 204 covers only 16 categories, categories of food, but that means thousands of different products. And the FDA has been implicit that this is just a start. We're ready. It's coming. It's really not an if but a when. And in my opinion, it's not a who, it's us. Nobody is better equipped to deal with this new requirement than Park City Group ReposiTrak to make sure we are well positioned for any deployment time line and take full advantage of this rule. We're continuing to evaluate noncore revenue and resources associated with it. Some of our customers whose primary products are outside the food industry will not grow in the same way our food-oriented customers will strictly due to the new traceability rules. As a result, our revenue potential in these cases is capped and increasingly, these customers are noncore to our business. In some cases, we may trim these noncore services. Not only are we now a SaaS-only company but that transition is fully behind us. Each quarter, starting with our 2023 fiscal first quarter will compare to year-over-year quarters that are comparable. We will finally have what we call like-for-like metrics to match our recurring revenue performance. Again, our bottom line will grow faster, and our EPS will grow faster yet as we continue to reduce our shares outstanding. We have invested significantly over the years in customized automation for our own operational efficiency. That's unique. Our tools are embedded in the very same platform that we deploy for our customers. We know of no one else who has an enterprise footprint in terms of applications that has done it with a single, fully integrated platform the way we have. We're extraordinarily proud of our development team and their vision. Honestly, it's amazing, seriously. It's amazing. This is why our revenue per employee metric far exceeds published industry peer averages. In fact, it's nearly double the industry average for a business of our size. Accordingly, we believe we'll continue to scale revenue significantly with very little added costs, even considering the traceability initiative that we've undertaken. Additionally, we are leveraging our technology and capabilities to expand our addressable market. Compliance and traceability in food service, QSR, et cetera, are greenfield opportunities for us. We're cautiously optimistic that we might see -- might see a win or 2 in this space from early adopters prior to the end of fiscal 2023. And if we do, we should see demand accelerate in those areas also. This is speculative, but we're certainly having some encouraging conversations at this point. With gross margins of 80-plus percent, net margins of 3-plus percent, this incremental revenue will disproportionately fall to the bottom line. This profitability results in bolstering our cash generation and enabling us to aggressively buy back and retire shares. And now it enables us to return capital to the shareholders in the form of a cash dividend also. We view the dividend as simply another tool in our capital allocation toolbox. The dividend also allows a new group of investors to consider us for their portfolios. We will continue opportunistically to buy shares. We will continue to invest in initiatives, including technology to enable organic growth. And while to this point, M&A has not been a very important area of focus for us, largely because most acquisition targets don't meet our standards of profitability. Potential acquisitions do remain an option for us should we find the right one. But with 5 consecutive years, 20 consecutive quarters or more, of GAAP profitability, a fortress balance sheet and an incremental top and bottom line growth in our future, we've reached the point where intact a dividend does make sense. So going forward, our strategy will be, let's take great care of our customers. When our customers are successful, they buy more. A major component of our position in the traceability initiative is that it's any of our existing customers that will need our traceability help. Second, we're keeping our goal of recurring revenue at a target pace of 10% to 20% a year over the long run. Third, continue to drive our internal productivity so that 80% to 90% of that incremental revenue becomes real earnings -- I think expense control, cash earnings per share, et cetera. And finally, we'll continue to shrink the number of shares outstanding and return capital to the shareholders, both by buying back shares and by paying a cash dividend. It's important to note that we're achieving this expanding profitability, all the while investing in our traceability offering. As we've stated, traceability is not yet contributing to our top line and the industry continues to wait for the FDA's formal announcement in November of '22, and we've mentioned, we fully expect there will be litigation to slow that down in any event. So with that, I'd now like to open the call over to questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from the line of Thomas Forte with D.A. Davidson. -------------------------------------------------------------------------------- Thomas Ferris Forte, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [2] -------------------------------------------------------------------------------- Great. So Randy and John, congrats on the quarter. I have 4 questions. I'll go one at a time, right. So question number one, why is now the right time to initiate a quarterly dividend? And why is a 1% dividend yield the right target? And then if you're right in the traceability catalyst, would you consider a onetime dividend in the future? -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [3] -------------------------------------------------------------------------------- John, you want to take that? -------------------------------------------------------------------------------- John R. Merrill, Park City Group, Inc. - CFO [4] -------------------------------------------------------------------------------- Well, like I said, it's a -- it's part of our capital allocation strategy. 1% is not a meaningful number. It's more about the different levers. So we're obviously focused on increasing the cash on our balance sheet for our customers that gives them peace of mind as far as paying down the debt, we've done that. It's just one as Randy puts a particular tool in our toolbox. So our goal is to obviously use all of those levers, M&A, maybe another one. but that's our focus at this time. Why is this the right time? I think that -- and I said it before, there's no magic number of what cash we need on the balance sheet for peace of mind. But with $6.1 million in cash from operations and growing and paying down debt. I do believe that this is the right time, in my view, to pull that lever for a cash dividend. As far as a onetime in the future, the future is the future, but I think that if you can model out and you can -- I think we've made it very simple that what our cash recurring revenue is and what that contribution is to cash from operations that we would utilize a part of that growth cash in the future to increase that dividend, what or when or what else happens down the road, may impact that. But with our line of sight, we're very comfortable with where we're at right now. -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [5] -------------------------------------------------------------------------------- Let me add one other point to that from a kind of management perspective. We can't precisely answer the question of how we're going to allocate that capital. If the stock price is lower than what we think its intrinsic value is, perhaps a larger share of the money would go to -- of our free cash would go to stock buybacks. If the stock is well priced, then cash dividend remains that possibility. I think if you look in compares to other tech companies, that 1% yield is, in fact, not too far off what other companies pay when they are paying dividends. So we feel pretty good about where we are. -------------------------------------------------------------------------------- Thomas Ferris Forte, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [6] -------------------------------------------------------------------------------- Two of 4. So -- and then this is carefully worded, Randy. So I'm trying to trip you up here. All right. So beyond potentially traceability -- so beyond traceability, what are one of the most important challenges your food retailers are facing today? And how is that creating an opportunity or challenges for you? I was thinking of our inflation, cut labor market, you may have other things you want to highlight. -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [7] -------------------------------------------------------------------------------- Well, because this industry is structurally low margin, that is to say the industry we serve retail food, they are constantly concerned with their costs in terms of purchases and your ability to pass those purchase costs on to their consumers. So if anybody in the world was thinking about inflation, I assure you, it is the supermarket industry. At the same time, their consumers are trying to figure out how they in turn, cope with inflation. That includes trading down, going from branded CPG to private label, et cetera. Almost everything that we do is geared to helping our customers, the retail food sector cope with whatever the current economic environment is/regulatory environment. So our compliance business to a great extent, is driven increasingly in the future with Rule 204 by regulatory matters. But it's driven today by litigation. You can barely pick up a newspaper without reading about a food issue of safety. I mean, recently, Wendy's, others, tens of millions of people per year get sick from food. Several thousand per year actually ultimately die from food-related illness. So the truth is we've got both litigation pressure, regulatory pressure on the compliance side and economic pressures that the industry has to cope with day in and day out, fueling both sides of our business. So we're pretty well positioned. I mean, I think another question that might be a corollary, Tom, would be, what if we end up in a deeper recession than most people are calling for? I think that's problematic for the industry. I think if people significantly cut back on their purchases that hurts the industry. But at this point, the beauty of food is even -- even when times are tough, people eat. So it's one of the reasons it used to be called a defensive industry that we picked that place to hoist our flag, if you will. And as the regulatory environment changes with Rule 204 over the next several years, it just very logically takes us into the arenas of quick service restaurants, full-service restaurants, food service, et cetera, convenience stores. So we're on the march and we feel pretty good about where we're positioned. -------------------------------------------------------------------------------- Thomas Ferris Forte, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [8] -------------------------------------------------------------------------------- Right. Excellent. All right. So 3 of 4. So can you talk specifically about the competitive threat of do-it-yourself for traceability? So a lot of times, your competitor is your potential customer and their desire to do something internally. Can you talk about if it's different for traceability for what you're talking about? -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [9] -------------------------------------------------------------------------------- Well, that's a really interesting question. To the extent that each retailer develops their own way and method of doing supply chain activity related to traceability, the more difficult the environment for traceability becomes for suppliers. In other words, imagine you are a supplier, you have 50 retail customers. Each one of them wants you to do something different to conform to their traceability environment. It's catastrophic. So it's our belief at the end of the day, although some retailers, a few might, in fact, do their, we call it, roll-your-own because you're right, that's our major competitor. But for the most part, businesses will be looking for a lower cost solution than doing it themselves, that would be us, a more robust way of doing it than doing it themselves, that would be us. And finally, a solution that's endorsed by the industry trade associations so that they don't look like an outlier. And once again, that would be us. So there will certainly be some who do it. We think in this particular case, there's likely to be fewer rather than more. -------------------------------------------------------------------------------- Thomas Ferris Forte, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [10] -------------------------------------------------------------------------------- All right. Great. And then last question. So at a high level, how would a QSR customer be similar and different to a grocer for Park City, including the economics? -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [11] -------------------------------------------------------------------------------- That's a little difficult to answer until we're deeper into the sales cycle. They're different in this respect. Supermarkets tend to have relatively few stores compared to the large QSR guys, but far more suppliers. So just to have a basic supermarket of 50,000 SKUs, which is pretty basic, you're typically talking about 1,000 to 1,500 suppliers. If you are on the other hand, a large QSR like Domino's or McDonald's, et cetera, you have thousands and thousands of stores but you might only have a couple of hundred suppliers. So they're really the mirror image of each other. One has 2 suppliers, lots of stores. The other has exactly the reverse. What we think, therefore, is that as we get deeper into the sales cycle with our possible new customers, I think what happens is that we develop a slightly different model, but the goal would be to make it fixed cost for the suppliers so they can afford to do this and easy, inexpensive for retailers, QSR, franchisors, et cetera, and their franchisees to join the network. So we're trying to take pricing off the table as a point of friction. And I think we're going to get there. I think we'll get there. -------------------------------------------------------------------------------- Thomas Ferris Forte, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [12] -------------------------------------------------------------------------------- Right. So last -- the follow-up to that one. So look at it differently, would you need a new sales force? Or is this something your sales force could do? And is there any reason to believe that your contribution margin on that dollar revenue wouldn't be the same $0.80 as it is in everything else $0.80-plus? -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [13] -------------------------------------------------------------------------------- Yes, the margins will be the same. I don't think we need a different sales organization every year, we're likely to add a little bit to our sales organization. That's embedded in what we see going forward, and it will certainly not have a different contribution margin. It's just all incremental top line and incremental bottom line. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- Thank you. At this point, we have reached the end of the question-and-answer session. And I'll now turn the call back over to Randy for any closing remarks. -------------------------------------------------------------------------------- Randall K. Fields, Park City Group, Inc. - Co-Founder, Chairman, President, CEO, COO & Head of Sales [15] -------------------------------------------------------------------------------- Yes. Thanks, everybody, for listening. And hopefully, if you have additional questions, send John or Randy an e-mail, and we'll see if we can help get the questions answered. In the meantime, we'll talk to you before too very long as we report our first quarter. Thank you. -------------------------------------------------------------------------------- Operator [16] -------------------------------------------------------------------------------- Thank you, everyone. This does conclude today's conference. You may now disconnect your lines at this time. Thank you for your participation, and have a great day.

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