ReposiTrak Inc (TRAK) 2017 Q4 法說會逐字稿

Good day, and welcome to the Park City Group Fourth Quarter and Fiscal Year-end Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Dave Mossberg, Investor Relations. Please go ahead, sir.

Thank you, Melissa. Before we begin, we will be referring to today's earnings release, which can be downloaded from the Investor Relations page of the company's website at parkcitygroup.com.

I also want 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 this 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 changes in our operating statements. The reconciliation of non-GAAP result is in our earnings release and on the Investor Relations section of our website.

Our speakers today will be Mr. 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.

Thank you, Dave. And good afternoon, everybody. We've put up a record quarter in terms of total revenue and revenue growth. This capped off a great year that just got stronger and stronger. Results continue to be driven by growth from ReposiTrak. We signed 3 more Tier 1 retailer hubs in the fourth quarter and continue to see strong momentum in adding Tier 2 supplier hub. As a result, we ended fiscal 2017 with nearly twice as many ReposiTrak hubs and supplier connections as we had at the end of fiscal 2016.

The sense of urgency among users through participants has steadily risen. Food safety compliance is now one of the most critical issues on the industry executive mind, and they are coming to us. We are growing as fast as we can while maintaining our high level of commitment to our customers' success. Our customers' success is the bedrock of our company because if our customers are successful, and they feel in relationship with us, then they'll want to buy more from us, and they will refer us to others.

I want to make some clarifying comments about our product offering. ReposiTrak is our compliance management platform. We believe ReposiTrak is at an inflection point this year with regards to market acceptance as the industry's standard compliance management platform. And I want to be clear as to what we're referring to when we make that assertion. We believe there are certain attributes that every buyer needs to know about every supplier in the U.S. food and consumer product supply chain. ReposiTrak enables a retailer, wholesaler or product supplier to know that every one of its suppliers is compliant with any attribute it determines to be important, whether they be the obvious regulatory attributes, such as a clean food safety audit or proof of insurance, or less obvious attributes specific to a particular hub, such as GMO or kosher certification.

ReposiTrak has also been exclusively endorsed as the platform for aggregating this information by the most important industry growths, including SMI, ROFDA and now, you'll notice, GMDC. With the industry's need, its unique capabilities and these endorsements, we believe ReposiTrak, as the industry standard compliance management platform, could one day link virtually every buyer to every seller in the U.S. food and consumer product supply chain.

Vendor Portal, on the other hand, is our unified service delivery platform. Vendor Portal offers buyers and sellers a much broader set of capabilities than ReposiTrak's Compliance Management platform. Vendor Portal enables commercial activities between a buyer and a seller on ReposiTrak's compliance network. Vendor Portal does this by layering on our supply chain applications through ReposiTrak's self-implemented cloud-based compliance platform. Vendor Portal has many applications. Some of these, such as scan-based trading, we are already the leader in, and we know there is a significant market for these. Others, such as Track & Trace, do not yet have a proven market. We think Track & Trace is an obvious extension of ReposiTrak's compliance capability. Our technology for Track & Trace is embedded in Vendor Portal, and we think we can do it better and cheaper than anyone else. But so far we're not seeing broad-based demand for Track & Trace nor are we seeing any sort of industry consensus about a common approach, the 2 necessary conditions for a real market opportunity. So we're waiting for a better point of entry before pursuing Track & Trace more aggressively.

That being said, we feel very good about the prospects for Vendor Portal in fiscal 2018. This is based on our assessment of the market for already proven applications in Vendor Portal and the feedback we are getting from ReposiTrak's growing network of hubs and suppliers.

So let's talk about the numbers, revenue. Fiscal fourth quarter revenue grew 37%. As a result, full year revenue grew 35%. Fourth quarter revenue and revenue growth is the highest the company has ever generated. As a result, full year revenue came in at the high end of our annual goal of 25% to 35% growth. This was due to revenue growth driven primarily by the addition of larger hubs, power of the smaller hubs, supplier hubs are also beginning to move the needle, and fourth quarter results were aided by a small contribution from MarketPlace.

Profitability. Fiscal fourth quarter net income was $883,000 or 17% of revenue, up from $498,000 or 13% of revenue in the same quarter a year ago. As a result, full year net income was $3.8 million or 20% of revenue, up from $667,000 or just 5% of revenue in fiscal 2016. This increase in profitability demonstrates the operating leverage inherent in our business model.

With regards to expenses. Total operating expenses rose 30% in the fourth quarter, while total operating expenses for the full year rose 13%. This steady increase in expenses was expected. The company is stronger than it's ever been before. Our business is taking off. We're generating positive net income, we're generating positive cash flow, we have a significant and growing cash balance. Therefore, we will invest against our customers' success. Specifically, we are investing in scaling our success team. We are investing in internal automation via our 10X project, we are investing in developing new compliance capabilities for ReposiTrak and we are investing in the launch of MarketPlace. These investments will drive customer success. And that, in turn, will drive revenue growth and more operating leverage.

Now I will drill down on the expenses by component. But as I said before, these numbers tend to fluctuate from quarter-to-quarter as we invest in our future. Cost of service increased 50% in the fourth quarter for a 24% increase for the full year. This was primarily due to incremental expenses associated with the development and scaling of MarketPlace. Cost of service will grow as we continue to invest in new capabilities and new products. But the fourth quarter was a step-up, and we do expect gross margin expansion in fiscal 2018.

Sales and marketing rose 10% in the fourth quarter but declined 5% for the full year. The drop for the full year was due to savings in the first half of the year associated with the repositioning of our sales force. While the increase in the back half of the year was due to us beginning to scale our success team once we had repositioned the sales force. Our success team doubled in size in fiscal 2017, much of this in the third and the fourth quarters. We expect it will likely nearly double in size again in fiscal '18. But we don't see ourselves as having that marketing-heavy profile of most SaaS companies, and we expect any increases in sales and marketing expenses in fiscal will continue to be far lower than revenue growth.

General and administrative rose 38% in the fourth quarter for a 31% increase for the full year. This increase was primarily due to higher consulting fees and investments associated with our 10X project. We will continue to invest in automation and other enabling technologies, but we also expect G&A to fall as a percentage of revenue in fiscal 2018.

With regards to cash flow and liquidity, we ended the year with $14.1 million in total cash. This was up $2.7 million from fiscal 2016 year-end. Operating cash flows for the year were $2.3 million. This was up from $500,000 the year before.

Accounts receivable and DSO did both rise significantly. This was because we shifted ReposiTrak from an annual prepaid business to one with a regular accounts receivable cycle. We did this because it is -- it substantially reduces the time it takes to get a hub's suppliers connected and compliant. As I said, we're stronger financially than we've ever been and, therefore, we will continue to invest in our customers' success.

Similarly, our capital expenditures in the fourth quarter was higher than usual because of the purchase of a small aircraft. We believe a key aspect of our execution success is going to the customer site and having our teams sit down with their team to define their success. The purchase of the plane followed a careful analysis of where our team is, where our customers are and what is the most effective way to achieve this objective, particularly as the number of larger customers continues to grow, just putting greater demands on the travel schedules of key members of our team.

So what does fiscal '18 look like to us at this point? We expect revenue growth due be in line with our annual goal of 25% to 35%, with the caveat that growth may vary substantially quarter-to-quarter. We expect higher operating margins in fiscal 2018 than fiscal 2017. Even with our plans for continued investment in 10X, in Vendor Portal, in MarketPlace, we still expect an incremental contribution margin of 50% to 60%. We also expect to see a higher percentage of net income convert into operating cash flows, which should translate into an even larger increase in our cash balance, which we view as a competitive advantage. In short, things are going well, and it's a pretty exciting time to be a part of Park City Group.

Now I'm going to turn it over to Randy for a more qualitative review.

Todd, thank you. Dave, thank you. Once again, Dave asked me not to mention the fact that I will be reading these notes, and he's now smiling. Okay, here we go. I'll do this relatively quickly, so we can get a few questions at the end. Yes, it was an extraordinary year. Financial results were strong but, importantly, the scale and scope of our network is growing at a terrific rate. And I would say at this point, we all feel as if we have a very clear vision going forward.

On a more basic level, 2017 was a year of, frankly, incredible execution. We talk about execution all the time. And I suspect through my comments, and I know you just heard it from Todd, we are in the execution business. Why? Well, superior execution makes our customers successful. That's the focus. Customer success makes them want to buy more from us, and customer success is why, in fact, we now have a greater than 90% customer retention rate. Interestingly, those numbers have actually trended up with the addition of ReposiTrak. So superior execution is really the key for us in terms of our top line growth. But nearly as importantly, execution is important to the operating leverage that we want and desire because if we execute well and we drive customer success, then they will refer others to us. And so we've always said, at least in this industry, the retail food industry, you start slowly with a few leaders, you execute well for them, drive their customer success and they begin to send others to you. That's why we've been saying for the last several years that the growth rate of the company was limited by our execution ability. And we, frankly, still believe that.

If referrals from our existing customers are our chief source of new customers, then we don't need to spend nearly as much on sales and marketing as a typical SaaS company. In the long run, as shareholders, that benefits all of us. So what do we see? In the next 3 to 5 years, we see this company having hundreds of thousands of connections, tens of thousands of customers and a multitude of applications across 3 tightly-knit platforms: ReposiTrak, which is our compliance management platform; Vendor Portal, our unified service delivery platform; and MarketPlace, which is our compliant vendor sourcing solution.

There are 3 phases in the sense of customer revenue growth associated with the customer success in each one of these 3 platforms. First phase is ReposiTrak. ReposiTrak increases the scale of our network. In other words, when we say scale, we mean how wide is it, how many participants are there in it. Every participant in the U.S. food and consumer products supply chain and potentially, globally, needs to be linked to at least 1 compliance management platform. We believe, at the same time, that if our customers are successful with ReposiTrak and, therefore, with us, it will lead naturally to their using the Vendor Portal. The Vendor Portal increases the scope of our network. When we say scope, we mean how deep is our network in terms of application set. It expands the mandate of our engagement well beyond compliance to our supply chain application. Now if our customers are successful using both ReposiTrak and the Vendor Portal, it will be obvious to them that they need to be in the MarketPlace. The MarketPlace, in turn, offers hubs as we call them: retailers, suppliers, wholesalers, people doing business with the supply chain, an easy way to replace their noncompliant vendors. MarketPlace offers compliant vendors, think of them as the good guys, an easy way to capitalize on their success at compliance. MarketPlace, in turn, is really reinforcing both the scale and the scope of the network that we're building.

So we take a lookout, what kind of a business is this going to be? What will it be? Well, it'll certainly have these characteristics. One, it will be highly automated and highly scalable. Two, it'll be self-reinforcing by design, meaning using the system will cause you to want to use more of the system. But it will always be fundamentally execution-dependent. So that's our mantra. For those of you who've been around for a while, you know that's what we've always believe. And frankly, given where we are today compared to where we were just a few short years ago, it looks as if successful execution has, in fact, been the driver we hoped it would be.

So in other words, our growth really does depend on just continuation of successful execution rather than a big marketing budget. Well, now I want to talk about what we call the success team. Years ago, we called them our inside salespeople, and they aren't. What they are is our success team.

Developing a success team is an extremely important area of focus for us. We've hired a new experienced leadership group who solely focus on developing that team. We're investing in training and technology via the 10X project to give the success team additional tools that we think they need. We're refining their activity set to drive productivity. And we're also staffing the team so that they can deal with a wider and wider variety of foreign companies that are, in fact, using ReposiTrak. The team already speaks a total of 8 languages, and more languages coming. Most importantly, we're building a culture of people who truly care about the success of our customers.

If you were to know us as an insider, one of the things that we think you would appreciate is that we believe, in the long run, the most important thing we're creating is a culture that enables our people to help their customers to be successful. And ultimately, we believe that will be the primary driver of our success. We are incidentally seeing some tremendous gains in productivity as a result of the focus. And recently, in just the last quarter, we saw near triple-digit increases in the productivity of each of the members of the team. So as we look forward to 2018, we're not just going to scale the group in terms of size to handle more. We're also going to continue to enhance the productivity per team member.

Update on ReposiTrak. As Todd highlighted in his comments, ReposiTrak's momentum continues. Here's an interesting observation, we added more ReposiTrak hubs and supplier connections in fiscal 2017 than we did in the 4 prior years cumulatively. For those of you who've been around for a while, you remember the first year, we did a couple of hundred connections, and now we're doing them in the tens of thousands per year. We're moving aggressively to increase both the scale and the scope of this compliance network. In terms of the scale, we expect during the current year, 2018, to add more Tier 1 hubs and supplier connections than we did in the prior year, last year, 2017. We'll be increasing our emphasis on adding Tier 2 supplier hubs this year. And we've already, in fact, begun to see an uptick.

What's exciting is that virtually, every one of these new Tier 2 hubs that we're, in fact, bringing on as customers have been using ReposiTrak at the request of a Tier 1 hub prior to this. The net of that is that they found the system so beneficial that they want to become hubs themselves. In essence, they're self-referencing. Remember what we've been saying about execution versus marketing? Well, if we execute well and drive success for our customers, then they will feel in relationship with us, and they'll want to buy more from us. The acceleration in Tier 2 sign-ups is, at least to me, a direct evidence of this dynamic. If we're successful, we think that Tier 2 hubs will become a significant new growth driver by fiscal 2019.

With regards -- regarding the scope of the network, we continue to enhance ReposiTrak's core food safety compliance offering. In other words, in each of these 3 different platforms, we're adding more and more applications, or apps, that our customers can use to drive their success. We launched the new QMS application set this year with our Tier 1 hubs. And these are things that help people ensure product safety and quality, and they can be little things like monitoring the washing in the inside of the trucks between loads or checking to make sure all the rat traps in a warehouse are empty, little things but important to the quality of products that our customers make. These new applications are examples of how we provide a significant differentiation. And our customers adopt them and, ultimately, of course, that increases not just the scope of our engagement with them, that drives up our revenue per connection but, most importantly, continues to deepen our relationship with our customers.

The Vendor Portal. Our converged business plan is gathering momentum as customers realize that there's a linkage between compliance and supply chain management. That is helping to increase the scope of our engagement. As Todd pointed out, Vendor Portal leverages ReposiTrak's network to an even greater scope by expanding our mandate well beyond food safety compliance. The Vendor Portal creates a positive feedback with the compliance while reducing the administrative burden and cost for both the hub and their suppliers. As a result, we're seeing growing interest from a much broader group of prospects and anticipate several significant adoptions of the portal in fiscal 2018.

MarketPlace. The growing scale of ReposiTrak's network is driving excitement about MarketPlace as we're getting closer to a broader launch. Simply put, as the number of ReposiTrak hubs and suppliers grows, the need for making new connections to replace bad suppliers grows exponentially. The use of MarketPlace by our alpha customer, who's one of the largest retailers in the country, although small initially, is growing very rapidly. This has not only just validated our thesis as to the fundamental need for MarketPlace but given us a possible additional use case. Working with this alpha customer has also helped provide a buildout of the MarketPlace's infrastructure and provided us a with really important insights as to how this platform might be used beyond simply vendor replacement. This, in turn, has led to discussions with other retailers. And we're now in talks with several of these hubs in preparation for a broader launch. So all of these pieces of the puzzle are working with each other to grow both the scale and scope of what we do.

So we'll go about some other strategic developments that are going on. From an operational perspective, we're going to continue to focus our own internal efforts on the domestic retail food sector. Our total addressable market though is clearly much larger, including other geographies and other vertical markets. But we're realistic as to how much we can put on our plate while maintaining our high levels of customer success. So we are, in fact, exploring partnerships with others that will expand our reach without stretching our resources. Here's an example. We are beginning negotiations with a large global retailer to use ReposiTrak not just in the U.S. but potentially in other geographic markets. We're also having discussions with several potential partners, then using our technology platform in other retail vertical markets here in the U.S., not food-related. My goal is to consummate at least one of these partnerships sometime in fiscal 2018.

Also, very importantly, we just got another key industry endorsement, this time from GMDC. GMDC is the Global Market Development Center. It's one of the most important retail merchandise marketing organizations in the world. They will be exclusively endorsing both ReposiTrak and the ReposiTrak MarketPlace. They expand our nonfood compliance suite, representing over 600 general merchandise retailers, wholesalers and suppliers. The products from this group were in over 125,000 retail outlets, and represent more than $500 billion annually in sales. So this is a significant opportunity to expand the scale of ReposiTrak's network, and we are certainly honored to be that well thought of by an organization of GMDC's repute.

Third, I want to give you an update on our insurance condition. You might have noticed an announcement yesterday from FMI. FMI, the food industry's most important trade association, which also exclusively endorses ReposiTrak, just made our insurance partner, Berrian, their insurance partner. We were very closely involved in the process. Berrian is a subsidiary of Leavitt, one of largest specialty insurance brokers focused on the food industry. The consequence of this partnership is that retailers that use ReposiTrak may be able to lower their total insurance premium, as a result, reinforcing the positive economic impact for a retailer in using ReposiTrak. It's been a long time coming, very significant, and it's part of our evolving strategy, if you will, to make ReposiTrak an even more compelling proposition from a purely economic perspective.

The ecosystem around ReposiTrak and Park City Group is growing, our reputation is growing, and we're proud of our execution and humbled by organizations like these and our customers who are aligning with us. So as we look out to 2018, it's going to be a particularly interesting year because we see not only the continued high growth in our core business but we also see a rapid uptake of our other offerings, the new things that we're doing, as well as additional alliances, both domestically and internationally. We're intensely focused on maintaining our high levels of customer success while continuing to scale the business. As a result, we're confident that 2018 would be within our 25% to 35% annual target range. We're also quite confident that operating leverage will drive higher net income margins and a more rapidly growing cash balance. However, we're not a quarterly company, so don't expect perfectly sequential growth and do expect quarter-to-quarter variability in growth. And as I've said before, we don't see any upside in sandbagging the results and telling you how we think we might perform. We tell it the way we see it, and hopefully you appreciate that. I think the point is, from where we are, 2018 is going to be another great year. Some questions.

Melissa, can you give instructions on how to poll up for questions?

(Operator Instructions) And our first question will come from Ananda Baruah from Loop Capital.

A few, if I could. Just with regards to ReposiTrak, and this is really an ASP question. Given the acceleration of the Tier 1 connection, and Randy, you spoke of your layering in Tier 2, and I think you actually use the words that they've begun to accelerate, although I don't want to sort of misstate the -- sort of really the tone of the message. How are ReposiTrak ASPs in the June quarter relative to the March quarter? I guess, specifically, I'm wondering if they bottomed here. And then how should we think about blended ASPs as we go through '18 given that it sounds like you expect Tier 2 to become a bigger part of the mix? And I have a couple of follow-ups.

Great question, Ananda. It's even a difficult one internally. Rather than give a specific answer, let me identify the forces, and there are several forces. There is one force which is to maintain the current ASP, which is the large hubs that we do business with are all at, in essence, an MSRP. So they have all the same price. So if that's all we did, the ASP would be the same. Well, on the other hand, we're also introducing these other applications, products, et cetera, which tends to increase the ASP. Having said that, we also charged less to Tier 2s, so the greater the percentage of Tier 2s going forward, the greater the downward pressure. So the truth is, 3 different forces, 1 trying to keep it the same. And you can argue that because the base is becoming larger and larger, the largest of those 3 forces is the force that says the ASP will be stable. And then what we suspect happens in the long term is, as we move down, no pun intended, the food chain, the pressure to bring down that ASP, which will be Tier 2s, because they're smaller, what then happens is there's downward pressure, but we suspect that will at least be offset by customers taking up our other offerings, which increases the ASP. I know that's confusing. But probably, from where we are, we see most of the force to stay the same, some force to push it down, and some force to push it up. Todd, do you agree?

I would agree. And I don't think we really saw any change in trends in the third quarter versus fourth quarter. The bulk of the business is still Tier 1. The pricing on Tier 1 is still pretty stable. I think that dynamic pretty much continues through most of next year. I mean that's where the bulk of the revenue is going to be coming from. And frankly, from where we sit, we can't really say where the countervailing forces of more Tier 2s versus upsell in the Vendor Portal on the Tier 1s will take next year's ASP. As Randy highlighted, we think Tier 2s really become more material in fiscal '19. And hopefully, by that point, we have deeper penetration of Vendor Portal to offset when those numbers, in isolation, would be -- have put downward pressure on ASPs.

Okay, great. That's really helpful, guys. And then the second one is just with regards to the success team. Could you just sort of framework for us kind of where you are in the process of what it is that you're looking to accomplish? And I know this is always a moving target, but you clearly have a strategy with how you want to kind of construct the sales -- the selling mechanism for the next meaningful stage of the company. And so however that -- however you guys think about that, if you could just sort of kind of fill in that mental road map for us to give us some sense of what it is you're shooting against? And not necessarily numerical targets, it could be sort of subjective stuff that you're using. Randy, you talked about building and establishing a culture, maybe some of the things that underpin that, some of the metrics and the milestones that you want to have in place to really be able to grow and scale the business. And I have one more.

Yes. That -- of the things we're working on, that is the one. My life experience before this in Mrs. Fields Cookies was that the best way to supervise people is with a culture not with managers, meaning that most of the time people are unsupervised. You cannot hear every word every person says to a customer. So the question is, how do you get people to care about the customer and deliver the kind of message that you would like to be delivered. So we're highly focused on getting people inside this business and the success team that care about customers. And interestingly, many of them are younger. And what's begun to happen, and I think this is pretty peculiar, but I think an indication of our success at it, virtually all of the recruits that we've had in the last 6 months into the success team have come from the success team. They are bringing people that they know in and, therefore, our turnover is extraordinarily low. And more importantly, people, in essence, are saying to friends and people that they know, you'll like working here, this is a good place to work. So we get people who care because my -- again, my life experience is, I can teach you almost anything, I cannot teach you to care. You have to find people that care about a customer, that they feel personally connected. And I could give you some interesting vignette. In fact, I'll give you one because I think it sounds -- it's appropriate. The other day I was talking to the group about things that were meaningful. And in the middle of my talk -- so imagine, here's the CEO of the company, talking to the newest group of recruits. And in the middle of that, the phone rings. Well, the only time our phone rings here is a customer. And you could tell -- you could just tell the room was, what are we going to do about that? And I thought, here's a chance to see if culture is working. And what happened was, one of the people on the success team got up, went over and answered the call and dealt with the customer. Now you could argue, technically, he was interrupting the CEO, which is exactly what I wanted. I mean, it was -- I clapped at the end of it. And I just said, that was extraordinary. What mattered to you most was not whether the CEO would be mad that you were interrupting him, but you knew the most important thing was that customer call. You -- that's not stuff you can teach people. They have to come to the party with that as a feeling. And so these young people take tremendous care of our customers. They care about their compliance and their success. And it's becoming self-reinforcing. I get a letter or 2 a week from customers saying how remarkable our service is or how quickly we got back to them. So it's working, and this team will help our customers to buy, ultimately, more of our product. But their real job is just to help the customer be successful with what they have today. Is that okay, Ananda? Is that...

It is. It is. That's helpful. And that actually dovetails into my third question, guys. And so look, this is going to be the annoying analyst question of my trio of questions, but I'm going to ask it anyway because you finished -- you put up 35% revenue growth for the quarter. Clearly, you talked about how Tier 1 connections are up, too, actually year-over-year. You talked about -- you gave some color of being up again next year. You're sort of scaling it to Tier 2. And Todd, you had talked to Vendor Portal also starting to layer in. So my question is, why not remove the low end of the guide or raise the low end of the guide to 25%? And then the part b is -- look, I think we all fully appreciate not allowing the guide to get ahead of itself so I won't ask why not raise it. But what would be the sorts of things that would allow you to kind of tease up -- beat the 35% high end of the guide this next year.

I want that question, I want that question. First of all, what we said is, for the next 3 to 5 years, that's the range that we expect. It's not year-to-year. So rather than every year give you a different guidance number, I really think that's a sustainable long-term growth rate for us in that bracket, 25% to 35%. And if the question is -- and I just need to be very cautious here -- what kind of factors take us to the high end versus the low end? We've taken a lot on our plate this year between Vendor Portal, MarketPlace, et cetera. And to a certain extent, we just don't know. So we've got a pipeline that we think keeps us well in that range, we know our ability to execute. And what you don't want to do with a company that has this much potential is to stretch it too thinly because then, of course, you run the risk that none of the good stuff you want to happen happens. So I think people at the midpoint of that range are closer than anybody at either end. It doesn't really matter. So that's not additional guidance that some years, in the next 5, we're going to be 25%; some years, in the next 5, we're going to be 35%. And I also said when we put this out there last year, it's possible, depending on those 3 forces that we talked about, if the force that pushes our ASP up is stronger than the force that pushes it down, then that growth rate can move to the higher end of the range, and we might have a couple of years outside the range. But it's really a function of the number of new customers we take on and our ability to bring people inside the culture who can take care of those customers. That's the constraint. So we're not being coy, we're being straight. And it's not easy to give you a narrower range.

(Operator Instructions) And our next question will come from [Joe Feller with ATW Company].

Well, I have 2 questions. Two of the -- according to your own thing from last year, 2 of the 5 biggest retailers are not doing business with you guys. And now with the buyout of Whole Foods, that will be 3 of the 5, I expect, because I don't believe you guys have done business with either of the partners in that buyout. How do you guys hope to deal with that? And how do you hope to deal with blockchain?

Okay, good -- is that the 1 question? Or is that 2 questions, Joe?

Let's say it's one question. How do you plan on dealing with blockchain?

We're not going to deal with blockchain, it's a nonevent. Remember -- I don't want to be too techie here -- blockchain is a way of storing information. There's nothing interesting or intriguing about it except this presumed security. That's the presumed idea. The way people are thinking of using blockchain is for tracking and tracing. That's not our business. It's our capability. It's just that we don't get any revenue from it. And as Todd mentioned, we see very little market into this. Blockchain underneath has a real problem as do anybody who has an RFID tag or any tracking and tracing mechanism. All mechanisms require they be put on a carton. So it doesn't matter whether it's an RFID tag or a label, blockchain has to get the information from somewhere. It's just a database. It's a distributed database is the way to think about it. So somebody has to scan the information in. That requires a physical device and human labor. And the problem with that is, I can just assure you because people have been trying this now for, I don't know, 10 years? They can't get it cheap enough at the labor level to do it. So the top 50 CPG companies, consumer packaged goods, potentially could afford to do something like that. And so the top 50 CPG companies with a few retailers might do something around tracking and tracing their goods. But the reality is, people don't die from Kraft macaroni and cheese. That's not our -- that's not the risk profile out there. The risk profile is the smaller vendors. So it's the cost of creating the label, scanning the label at every single stop. That's the impediment. When people want to do tracking and tracing, we believe what they'll want to do is do it inexpensively, and we have a really inexpensive solution for doing tracking and tracing. But candidly, there's just not much interest. A lot of marketing, not much interest. By the way, the way we calculate it, we do business with 3 of the 5 largest supermarket chains in the U.S. By the way, Whole Foods was not one of those, not one of the top 5, either -- regardless of who own them. So we do today do business with 3 of the 5 largest. And who knows, could be another -- we might get another one. There's certainly a few we'll never do business with. So -- and it's not important to what we do. In other words, the only -- it's hard to explain -- when you're doing compliance work, the only revenue, in essence, we would miss would be of suppliers that are captive to any one of the retailers. So if it was [Schmarble Farby, Inc.] as a retailer, and he had 22 suppliers that only sold to him, those would be the 22 we wouldn't get because other suppliers supply other retailers and, therefore, end up in our network. So I think we're broad enough now. And as we look out, our pipeline is such that we're going to get very, very deep into the total size of the supply chain. So none of that concerns us. So...

Well, then my next question is, with the buyout of Whole Foods, don't you think those guys are going to be in the top 5? I mean, from everything I've seen, the purchaser, not to name names, has always ended up in the top 5 of whatever genre they end up being in.

Yes. I think -- let me go back to what I think is fundamental. There are hundreds and hundreds of supermarket chains from a few stores to thousands of stores. Strangely enough, they all have a comparable number of vendors. So if you're a chain of 10, you still have 1,000, to 1,500 vendors on your shelves. And if you're a Whole Foods, you'll have 1,000 to 1,500 vendors. So in our business model, it really doesn't matter to us whether it's a large chain or a small chain. And honestly, it's sometimes easier to get the smaller guys to do business with you than the larger guys. But we do have 3 of the 5. And frankly, it doesn't make any difference to me if it's 3 of the 6 or whatever it would be. We're certainly pleased with where we are. We do not have to get everybody. We've never thought we would get everybody in the retail world to do business with us, but we're getting more than our fair share at this point.

And that does conclude our question-and-answer session for today. I'd like to turn it back over to our speakers for any additional or closing remarks.

Okay, thank you, everyone. This is Dave Mossberg. Our phone number is on the press release. If you have any follow-up questions, we are available for those. And look forward to you on our next call, which will be around the 9th of November. Okay, take care.

That does conclude our conference for today. Thank you for your participation.