Park City Group Inc (PCYG) 2017 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Good day and welcome to the Park City Group second-quarter 2017 earnings call. Today's call is being recorded.

At this time I would like to turn the conference over to Dave Mossberg, Investor Relations. Please go ahead, sir.

Thank you, Paula. And thanks everyone for your interest in Park City Group.

Before we begin we will be referring to today's earnings release which can be downloaded from the investor relations section of the Company's website at Parkcitygroup.com. I also want to remind everyone that this conference 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 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 call.

Our speakers today will be Mr. Randy Fields, Park City Group's Chairman and CEO, and Mr. Todd Mitchell, Park City Group's CFO. Todd?

Thank you, Dave. Good afternoon everybody.

It was another great quarter for us. Not only were we able to exceed our internal targets for both revenue and profitability, both came at record highs with the Company. We believe this clearly demonstrates continued strength in the business and the operating leverage inherent in our business model.

Revenue. Fiscal 2Q revenue grew 35% to $4.8 million from $3.5 million a year ago. This was the highest quarterly revenue ever and revenue growth for the quarter was basically in line with 1Q levels despite a much tougher year-over-year comparison.

Strong top-line growth continues to be driven by progressively stronger momentum across our business. ReposiTrak is continuing to generate strong growth due to both new customer wins and improvements in operating profit. And we are seeing strong demand for our vendor portal and supply chain applications as we reap the benefit of past investment and our new converged sales effort. Given the momentum we saw in fiscal 2Q and continue to see we are confident that we will likely exceed the financial and operating targets we articulated at the end of fiscal 2016.

Profitability. Fiscal 2Q net income was $1.38 million. This was 29% of total revenue in the quarter and I would note more than twice as much as net income for all of fiscal 2016.

It is also worth pointing out when compared to net income of $281,000 in fiscal 2Q 2016 we converted $1.2 million in incremental revenue into a $1 million-plus swing in net income. Some of this clearly reflects our ability to leverage investments in infrastructure which we were just completing a year ago and some of this is an indication of the relatively high contribution margin of our new application-based business model. Looking out over the remainder of fiscal 2017 we expect to generate profit margins at or above this past quarter's level.

Expenses. Operating expenses were $3.4 million in fiscal 2Q, up about 4% when compared to a year ago. This likely represents the lowest quarter you will see this year as operating expenses will climb a bit in the back half of the year.

We are benefiting from technology and infrastructure investments made couple of years ago and the reorganization of our sales platform. But going forward you will see us continue to invest in infrastructure and implement process improvements where we believe it will continue to translate into improved operating leverage.

By component. Cost of service increased 19% in fiscal 2Q to $1.2 million from $1 million a year ago. Within cost of service overall headcount was flat. The increase really reflected an investment in infrastructure and technology support as well as the capitalization of some software development costs a year ago.

Going forward, we expect cost of service to increase at a modest pace in relation to revenue growth and to continue to fall as a percentage of revenue. To be more precise, I think last year's comparison for this item was somewhat depressed. So the trendline for growth in cost of services is probably closer to 15%, although it could be higher depending on how fast we decide to pursue some opportunities to expand our application offer.

Sales and marketing. Sales and marketing fell 17% in fiscal 2Q under $1.2 million from $1.4 million a year ago. This decline was due to the convergence of the businesses and the shift to a lower cost sales model.

Going forward we expect sales and marketing expense to continue to fall as a percentage of revenue as we look to benefit from increased market awareness about ReposiTrak's strong value proposition and to leverage our converged sales model across fewer but larger deals. That being said, total sales and marketing expense is likely to rise modestly off this past quarter's level as we increase our customer service and sales headcount.

General and administrative rose $200,000 in fiscal 2Q to $938,000. This increase included a laundry list of things, but the biggest component about half of it was personnel and personnel support expenses. We also saw an increase in expense on outside consultants as we begin to put together plans to upgrade our salesforce and back-office infrastructures. And we increased our bad debt accrual to reflect our growing revenue base. Going forward, we expect general and administrative to stabilize as a percentage of total revenue while growing in absolute dollars as we begin to execute on our plans to enhance our infrastructure.

Cash flow and liquidity. We ended 2Q 2017 with $12.1 million in cash, up from $11.4 million at the end of fiscal 2016. This increase in cash reflects growing revenues and increased profitability.

Current and long-term accounts receivable was up in absolute dollars, although sequential increases are moderating. This reflects the shift in emphasis at ReposiTrak from a supplier paid model, which has upfront payments and essentially no receivables, to central billing, which has a more normal collection cycle.

Given how this improves our productivity and customer adoption we see this investment in accounts receivable as important. We ran an analysis last week and the total value of ReposiTrak's contracted business, that is the lifetime value of our central billing agreement, most of which are multiyear, and a full year's revenue from our supplier paid HUBs at 100% penetration, is close to $25 million.

It's also worth noting we've collected $0.5 million in off-cycle receivables just since the last quarter. And we are confident cash flow trends should significantly accelerate in the second half of the year as revenue and profits grow and we continue to refine our operating practices. Building cash on the balance sheet is important from a customer optics perspective, so this remains a focus of ours.

That concludes my review of the financials for fiscal 2Q. I turn it over to Randy now for qualitative.

Hi everybody. There's lots to say, although I think the numbers speak for themselves and as a result of lots to say I have prepared written remarks.

I know the most interesting things I tend to say are off-the-cuff. So I will be careful but I think there's going to be a lot of information in the next few minutes.

Fiscal second-quarter results, obviously, were building on the momentum that we generated in the first quarter. Second-quarter revenue was up 35% and revenue for the first half up 36% compared to a year ago. At the risk of sounding like a broken record, once again we generated record results for both revenue and bottom-line profitability.

Interestingly, the second quarter did achieve one more of the five goals that we set out for the year. We did have quarterly net income exceeding $1 million. In fact, as Todd mentioned it was a record $1.4 million. It certainly demonstrates our operating leverage.

We feel good about our balance sheet. It's stronger. We, obviously, ended the quarter with north of $12 million cash.

A couple of things to note in terms of what generated the growth. We saw growth in several of our new applications including ReposiTrak and the vendor portal. I know everybody is looking for the number I'm about to give, so pay attention here.

We said that we wanted to end 2017 with 20,000 connections and, yes, we did it in the second quarter. So we have exceeded our fiscal 2017 goal just halfway through the year.

And for perspective on that, I think it's interesting to note that a couple of years ago it took us a year to do the same number of connections that we now do on average per month. And to say that I am proud of the team would be a grotesque understatement. Incidentally, I think it's important to realize here that our approach to speaking with investors is a little different than our IR people would like us to have.

So let me frame this for a moment. And I know George is on the call, so George is going to probably send me a nastygram after this.

Many people believe that what we should do is to underpromise and overdeliver. And the problem with that is that we don't know what you know and you don't know what we know. And the inherent issue in that is we are both pretending.

So our approach is to say to investors, this is how management sees things. So seriously, at the beginning of this year when we thought very hard about how we would do for the year, 20,000 connections at the end of the year seemed like a reasonable forecast based on the information that we had.

So we didn't sandbag. We don't do that. We tell you what we are actually thinking.

So it is fair to say we certainly achieved the goal halfway through the year. Obviously, it feels great and from where we are as we mentioned in our last conference call, we now see our way to hundreds of thousands of connections in the not-too-distant future.

Our momentum, though, doesn't just reflect the obvious, bringing on connections. It really reflects some operational gains and our ability to bring suppliers on board, and here comes the important word in the sentence, successfully.

Now we've done is to simplify the onboarding process. We've gone to something that we call central billing with our HUBs and this does number of things. It significantly accelerates the onboarding of suppliers by removing much of the cost and complexity of building thousands of individual suppliers in exchange for building the HUB.

But also central billing, frankly, is much more attractive to our clients. It was a client idea, in fact. And it drives compliance faster and is much simpler for everybody to administrate.

So as a Company and in our culture we are constantly assessing our processes, our technology, our infrastructure to see if we can't do it smarter, better, faster, cheaper. And we've made some huge strides, I am going to come back to this in just a few minutes.

In terms of the account management team we have continued to grow the account management team. I'm really proud of the people. They have done a tremendous job.

We have very low turnover in that group and their success with our customers is outstanding. Putting it differently, we have now entered a very important virtuous cycle. We are combining improved account management and our fixation on customer success with internal automation and process simplification and this has proven to be a huge win.

Here is why. We can get suppliers on faster. We can get suppliers compliant faster.

This reduces the compliance risk of our HUBs faster. And it also more rapidly embeds us deeply into the HUBs core business processes. In other words, to shorten it, it's a win-win for everybody.

We continue to feel really good about ReposiTrak's prospects going forward. I will cover the macro first, then we'll talk about some new applications that we are working on.

Industry awareness about ReposiTrak is actually growing very rapidly right now. I'm amazed with the increase in awareness of us over the course of the last year. We see it in inbound phone calls, etc., meeting people who say, yes, we've heard about you.

Obviously says that word is spreading and spreading in a very positive way. And this is going beyond simply having some of the largest and most influential leaders in the industry using us as HUBs. It, frankly, represents a testimony to how deeply we have been penetrating their supply chain.

We are getting referrals from suppliers to their suppliers, HUBs to other HUBs. The whole thing has really been terrific so far.

Recently at an industry conference, and this I found very interesting, we were the topic in three different committee meetings over the course of 24 hours. Three different groups of people meeting on different topics were discussing ReposiTrak and what it represented as an industry told.

So all of this when I net it out makes me feel very confident about our prospects for accelerated market adoption. Yes, I did say accelerated.

Importantly longer term we are continuing to develop a number of new applications. And we are doing this across our entire footprint. The whole platform is seeing new and we think very significant and long-term contributing applications to our suite.

For example, the SQF database is now completely integrated with the ReposiTrak platform. This has taught us a lot, frankly, about linkages between food safety and other compliance activity. You'll see why that's important in a moment.

We've successfully introduced and easily repurposed quality management system in the industry. It's called QMS application, and that further increases our value proposition to people whose interest is food safety and quality of their products and manufacturing.

In each area of our business we are adding important new products, each area: food safety, compliance management and supply chain. Longer term, and as you know we are pretty long-term thinkers here, that gives us a high degree of confidence that the out years will have new revenue sources that we are introducing into the market in the current year.

So it's important to understand really that ReposiTrak isn't just about food safety. ReposiTrak is becoming a comprehensive compliance management platform that can be used for a whole host of other activities.

We have been getting questions from some of you about what, if any, changes might occur with the Food Safety Modernization Act due to the new administration and how that might affect our business. I'd like to point out that that's been a big topic of discussion for many companies in their conference calls.

Apparently one out of five earnings calls so far this season the topic of what the Trump administration means from a regulatory perspective has come up. Candidly from what we've seen so far there have been no changes. And even if there were changes like simplification we actually believe it would be a net positive in relation to our business.

So let me give you a little more detail on that. First, I need to give you some background on the FSMA. It is a law, it's not an executive order, which means it takes an act of Congress to make change.

Two, it was written by a Republican administration. And it received very strong bipartisan support.

Third, it was made a law by a Democratic administration with a Republican Congress. It was negotiated with the industry. So unlike other regulations in fact it's supported by industry. So in general I think it's safe to say people don't want unsafe food.

Second, the law and the regulation are actually only a part of what is driving adoption of ReposiTrak. Indeed, I would note that somewhere between 30% and 40% of all the suppliers on the system aren't food vendors at all. They supply other things that still are covered under ReposiTrak.

Some of the other factors that we consider to be drivers of ReposiTrak adoption in addition to the law is companies looking to protect their brand. It's not good, frankly, to be known as the Company that makes people sick. Companies looking to avoid lawsuits when the largest food retailer in the world settled food safety lawsuits for tens of millions of dollars, everybody pays attention to that.

Being known for food safety is a point of competitive differentiation for both retailers and food manufacturers. How do we know that? Well, there's a little company like Whole Foods or think of organic food in general.

Why do people pay up? The presumption is it's healthier and safer. So it's also reasonable to say that consumers aren't asking for safer food, they are demanding safer food.

In addition, if you really think through where does ReposiTrak fit into the Food Safety Modernization Act into regulation, we are the record keeper, we are the record keeper for tort and for regulation. So no matter what changes some records still have to be kept. And we don't care whether it's 10 records or 10,000 records, the reality is we are the record-keeping system, the compliance management system for any regulatory or toward problem.

A big part of our value proposition is that it's easy to adopt. And given its very low price point it's immaterial in relation to the benefit it provides.

Next, ReposiTrak is increasingly being viewed as the industry's all-encompassing risk management platform, not just about food safety. If there were changes actually it might simplify the regulation and make adoption of ReposiTrak even more attractive. We've definitely seen over the last several years that people are so confused by thousands of pages of regulation that simplification would certainly cause people to act more quickly and candidly in a fashion that leads to higher levels of compliance.

Finally, we haven't seen any change in the accelerated rate of adoption by our customers. In fact, as you've seen from our results, it's going faster not slower. So our pipeline continues to grow, and I think no matter how one analyzes the current administration's stand on food regulation it's not likely to impact us in an important way.

To be clear, though, food safety is not the sole vehicle of growth for Park City Group and for us in general. The integration of our two businesses is nearly complete and it's beginning to drive new opportunities. And it simultaneously is leveraging the investments we made in ReposiTrak technology platforms.

Let me give you an example. We are now capable of delivering our supply chain services via the portal infrastructure that was built for ReposiTrak. We call that the vendor report.

What that means is that our customers have a single platform on which they can begin to access all of our applications. That leads to more suppliers signing up, more self-implementation and more of our technologies being used by that supplier base including expanded automated reporting, analytical capabilities, our whole raft of applications. I'm very confident on the basis of the interest that we see amongst our HUBs and suppliers that we will begin to see a more rapid adoption over the next several years of a very broad suite of our applications via this vendor portal.

Next, new product. Marketplace, we have expanded our pilot program with one of the largest retailers in the world. We are increasing the number of participants in the marketplace.

It's been an incredible learning experience for us so far. And I'm not going to say anymore because I'm afraid I'll get too excited and probably end up saying too much.

The 10X project that was referenced in Todd's call is perhaps one of the more important things we are doing this year. I wanted to talk a little bit about what the 10X project is.

I have Todd and our controller driving it and it is a very important initiative from a whole variety of respects, both for customers and for you as shareholders. We have finance, sales and development all working together to enhance the platform and back-office capabilities.

Let me give you a concrete example of how important it has already been and what's likely to happen in the future. If you remember, we said we can see our way to several hundred thousand connections within a few years. But the last round of infrastructure work has already had a very important impact that shows up in our margins, in productivity and our customer service.

Here is a very specific example. The finance department had four people three years ago when we had less than 1,000 economic relationships, four people doing everything around billing, closing the books, doing all of the public Company stuff, etc.

We now have in excess of 20,000 economic relationships and we still have four people. That's what I call technology leverage. We want to do the same thing as we increase in size by 10 times over the next few years in terms of the economic relationships that we are maintaining.

The goal is to have little or no staff increases in our Company outside of sales and account management. The consequence of that is it keeps us lean, keeps us nimble while simultaneously staying very close to our customers.

I think it's reasonable now because I yell about it internally so often that the teams embrace this philosophy of highly automated, highly scalable in our culture. And I think the benefits will be felt not just by our customers but also you, the shareholders.

Let's talk about customer service for a second. It's tough to grow a Company at 30% to 40% a year or even higher and still be successful with the customers. Our growth is exciting but we are not losing sight of why we exist at all, our customers.

Our upper limit on growth continues to be not market opportunity but maintaining our culture of customer success. Here's a couple of examples, I love giving these, think of them as anecdotes of what we've seen.

One of our supplier HUBs, in other words a manufacturer using our technology, was able to reduce its staff in its compliance department from five to two over just a very few months. Obviously, the impact of ReposiTrak in terms of their cost structure was very significant.

One of the other things that we see happening that's very important, this one makes me very proud, is we are spotting and bringing to life noncompliant suppliers more rapidly with the central collection strategy and we are seeing HUBs, more importantly, getting much more hard-nosed about refusing to do business with noncompliant suppliers. They are turning them off. So in a sense in a very small way we think we are beginning to make as a Company an overall contribution to food safety in the country.

Our outlook for the future, this is the part you've all been waiting for. We remain confident in our outlook for 2017. So far in fiscal 2017 we have $9 million of revenue and $2 million of net income.

We expect growth of both revenue, profitability and especially cash flow to accelerate even more in the second half. That's what everybody's been waiting for. I can probably shut up now.

Todd is nodding his head violently. Okay, but I'm going to go on anyway because [this is still fun for us].

We are bringing a number of new very exciting products and services to the market in this calendar year. In the long term, these new services, not short term, but in the long term they provide significant additional revenue and customer success opportunities for us.

Longer term we do expect to continue to see years of 25% to 35% top-line growth. Some years could possibly be higher. We expect the rapidly growing revenue base to support progressively higher operating margins and cash flow, and we are going to more rapidly add cash to our balance sheet to provide comfort to our growing list of larger customers.

That has been a significant shift in the marketplace. We are engaged with, talking to, etc., and establishing relationships with much larger companies than we ever would have imagined would be the case. Our customers make long-term commitments to our platform, so our being solid is more important than ever.

So let's summarize. We set out five goals for fiscal 2017 on our 2016 year-end conference call.

One, we said we would bring suppliers on board much faster. We did.

We said we would see an acceleration in top-line growth. We have.

We said that we would have our first $4 million revenue quarter. Well, actually we've had two of those now.

And we said we would have our first $1 million net income order. We just did.

That actually leaves only one of the five goals unmet after just half of the year. And that was to have our first $5 million revenue quarter. Well, we are pretty confident that is going to happen soon, too.

So net-net, no pun intended, this is shaping up to be an inflection point in a series of extraordinary years looking forward. The team has done an amazing job and the truth is I hope you guys are as proud of them as I am.

That's it. Questions?

(Operator Instructions) Joe Feller, private investor.

Hi Randy. Awesome quarter.

Thank you.

All right, to drill down a little bit into your comments on the new administration, the only thing that concerns me is a piece of legislation that's been introduced into the lower house of Congress called REINS, R-E-I-N-S.

Yes, very familiar with it.

Okay. And number one, it's a two-part question, number one will it impact the regulations around FSMA? And for some of the other investors to explain the difference the FSMA is law but it's got to go through the executive branch to develop rules to bring companies into compliance with the law, which REINS addresses the existing rules or the potential or the rules that have already been issued by the FDA.

So the first part of the question is will REINS impact those rules? The second part of the question is will REINS impact at all ReposiTrak's relationship with the FDA? And maybe you could explain what that relationship is currently.

Got it. Okay. Actually there is a teeny, tiny part of the regulatory stuff that REINS potentially impacts as regards to FSMA.

It was one of the last rules promulgated and it's totally meaningless in the context of what we do. So the rest of FSMA is settled regulatory done. REINS really just goes back for all intents and purposes a few months.

But anything that would be at OMB or other financial ramifications of regulatory environment would be problematic. But there isn't anything that would impact us in REINS, no impact whatsoever.

And remember, I personally -- let me answer the second part and then I am going to hitchhike off that if it's okay, Joe. We don't have a direct relationship with the FDA. I think it's fair to say we've had sessions with them and if you can imagine this, I was stunned by it, a meeting was set up around what we do.

We thought it would be with the FDA and I believe there were 17 government agencies in the phone call. 17 different government agencies. Don't hold me to the number, it could have been as many as 24.

But I remember 17 different agencies touch food. It's stunning. So the FDA is aware of this.

We don't really want to get too close to government is the best way to put it. We are best off right where we are, and so we don't see any impact. I can tell you from an industry insider's perspective the industry really -- it wouldn't care whether it was self regulated or regulated by the FDA.

Remember we are only talking about part of this. The other part of the industry is the USDA. So the USDA touches all of the proteins that people eat.

The FDA doesn't deal with meat, etc., for the most part. It really is a specialized group. So there's a whole bunch of agencies that touch this issue of food, food safety etc.

We see nothing on the horizon, nothing that would cause people to stop record keeping. The best way to think about ReposiTrak is not how does the law impact you but what would cause people not to keep records.

Our livelihood depends on people wanting to keep records about their business so in the event of a lawsuit or regulatory examination or just an inquiry, they have those records easily on file and can reference them quickly. So we just don't see any impact from regulatory change at this point.

And if we could wave a magic wand we would and we would try and simplify it from 3,000 pages to about 200 pages and that would speed adoption and it would, frankly, make our life with people much easier. It would be good for our business. Thank you for the question, Joe.

All right, thank you.

(Operator Instructions) Will Hamilton, Manatuck Hill.

Good afternoon, guys. Randy, I appreciate the extra color in terms of guidance and outlook.

I was wondering if any chance you could provide us an update on how many HUBs you are in? I think you mentioned more customers and, obviously, we saw the Fresh Market news.

Yes, I'm going to give you a number. I'm going to wish that I didn't because it's just a -- is not a terrific indicator. But here it is.

The number is 33. But what is going to happen over the next year is you have to think in terms of large and small HUBs. If it's a retailer or a wholesaler they typically drag around from a few hundred to a few thousand suppliers.

On the other hand, we are seeing a much higher level and in future years this is definitely the area of opportunity for us, suppliers themselves becoming HUBs for their suppliers. So a supplier goes wait a minute, I love this thing. If I have my suppliers on it I give visibility to the retailer deeper into the supply chain.

So increasingly, that HUB number will not be a super indicator. So I think as we look at the back half of this year, there's going to be a number of new large HUBs for sure. We certainly think there will be a number of smaller ones.

It's just not a very good indicator. So that's probably more than anything else the reason we didn't point it out. But I knew you would ask it, Will.

Thank you. So are we at the point, though, where a supplier is already connected to another retailer and then if that other retailer, a new retailer signs on and you've already had the connection so it's like 2X right from the get-go?

Yes, that's a real -- that's actually a really good question. I don't know the exact percentages, but I'm guessing now that 40%, maybe 50% of the suppliers connected to a HUB literally just make a check mark and offer up new documentation that would correspond to that new HUB's specific requirements.

In other words, that more and more of our business is indeed already on the system so they are getting up to speed is simpler and faster. Is that the question you were asking?

Yes. Yes it is.

I think it's around 40. It probably never goes higher than 60, 70 because there's so many local suppliers. There's this horrible movement in America towards localization of supply chain, which means that if you are in, I'm making this up, you are in some place in Massachusetts you are going to have 200 local farmers as suppliers if you are a retailer there that wouldn't be suppliers to anybody else in the system in California, for example.

So there will always be a significant share of local, unique suppliers as opposed to national footprint and even regional footprint kinds of suppliers. But it's about 40%, so that's why I say we are now in this virtuous circle where it's going faster, we've simplified the business, we've gone to this idea of central billing with our retailers. Everything now is massively speeded up from where it was a couple of years ago.

But most importantly the compliance rates are going north and they are going north faster than they used to. So I think to your point since more and more of our suppliers are experienced with us, they know what to do and they go faster.

Just one question on the marketplace. So is the large retailer you are working with right now in the food side or is that retailer may have been involved with the supply chain side of things?

And can you expand a little bit on the economics for that business? Is it going to be subscription or is it like a commission where you collect, say, low single-digit, mid-single-digit commission?

Yes, during its first year of operation there's little if any revenue opportunity. We just want to get it scaled up quickly. And the first buyer in the system is, fair to say, does food but they also do other stuff.

So you wouldn't think of them as a grocery company per se is the best way of thinking about it. But they sell groceries. I'm not trying to be too cutesy, I just can't name them.

Thank you, guys.

(Operator Instructions) Steve Bell, private investor.

Great quarter, Randy. One question, what do we have left available to us in NOL carryforwards?

I think it's like $100 million. I don't know, it's a big number, Steve.

Okay, so in other words, we are covered for a couple of years at least?

Yes, yes. We do not want to pay our fair share I guess is the way of putting it. I'm sorry if that was a political comment.

God bless America.

Exactly. I think as we look out, and again I want to give management's view, so this isn't a Wall Street view, our pipeline is growing significantly, meaning prospects calling on us, prospects interested, people who are deep into the sales cycle, if you will, to become HUBs. That gives us pretty good visibility to what we need to do, not can do, but what we need to do to be sure that we are ready for this substantial expansion of the business in terms of economic relationships.

So the most important thing that's happened this year is not just that we've scaled it up so we've done 10,000 or whatever number of connections, 8,000 or 10,000 in the last six months. That's interesting, but what's important is the quality of those, the speed at which they've come up, the customer perception of us, etc., is extraordinary. So my focus, as you know, Steve, is I'm more interested in the quality of our results because I'm still old-fashioned, old is the operative word, enough to believe that if we do a great job for our customers they will start talking about us.

I can tell you, let me give you two anecdotes from this conference we just attended. First of all, in two of the three meetings we had customers of ours doing presentations about how good we are, talking about how we had massively changed their compliance, etc. And in one case it got to be almost a free-for-all because as one customer is talking about us we had to other customers saying, yes, I use them, too, and, boy, they did this for me in insurance and so on and so forth.

So there is a high degree of excitement in our customer base about what we do. And although I think it's fair to say that what we do is fairly prosaic, it's not sexy or amazing, it's blocking and tackling that every major business should do, our customers are excited about working with us. Our customers like us.

And what that means interestingly is, and this is almost on the edge of weird, I was just in, as you know I love being close to the customer. It's a mental illness of some sort of mine where I like to be in the room, I like to hear how we are approaching our customers, I like the sales process. And it keeps me close to what I think the most important stakeholder in our Company, our customers, have to say.

Our customers, without knowing what our other capabilities are, are asking us for our other capabilities. I was just in a meeting with one of our largest customers. In fact, in terms of food safety or ReposiTrak it's fair to say they are our largest customer.

And while I'm in the room they are asking us about other capabilities, our item management within our vendor portal, can we get down to the item level with food safety? Several of our customers have asked about that. Several of our customers have asked about our ability to manage price changes.

Several said can you guys help us with a marketplace idea? So what's interesting is without any information about what we do, customers are asking about our product set as it unfolds. So to me that very exciting, confirmatory sort of news about the adoption cycle that we will see in the next several years.

And because we have exceeded our own expectation trust me, not just Wall Street, our own expectations about this year it gives us flexibility about the introduction of some new products that drive revenue in the out years so we can start stacking dollars and simultaneously satisfying this customer demand that we see. So I know people think Randy gets excited about this. I have to tell you my excitement has reached new heights.

We are really on the right track. I think without laying out the whole vision over the next several years this is, once again, ours to lose, it is ours to lose.

I'm sorry I didn't mean to be so excited. I will shut up.

So we will use the NOL.

Yes, we will use the NOL.

Okay, great quarter again. Thanks for all of your efforts. They are greatly appreciated.

Thank you. Thank you guys for the support.

There are no further questions. I will turn it back to our presenters for any additional our closing comments.

Thank you all for your interest. And our numbers are in the press release so please feel free to give us a call or email us if you have any questions.

And didn't we say the second half of the year is going to even be better.

That's right.

Is that what everybody was waiting for is what the second half looks like?

That's right.

Thank you, guys. Thanks for taking the time.

That does conclude today's conference. We'd like to thank everyone for their participation. You may now disconnect.