ReposiTrak Inc (TRAK) 2024 Q2 法說會逐字稿

Greetings, welcome to the ReposiTrak fiscal second quarter 2023 earnibongs call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Stanlis with the FNK IR. Mr. Stanlis, you may begin.

您好，歡迎參加 ReposiTrak 2023 財年第二季 Earnibongs 電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。現在我很高興向您介紹主持人，FNK IR 的 Jeff Stanlis。史丹利斯先生，您可以開始了。

Thank you, operator. Good afternoon, everyone. Thank you for joining us today for the ReposiTrak fiscal second quarter earnings call. Hosting the call today are Randy Fields, Repositrak's Chairman and CEO, and John Merrill, ReposiTrak's CFO.

謝謝你，接線生。大家下午好。感謝您今天參加我們的 ReposiTrak 第二財季財報電話會議。今天主持電話會議的是 Repositrak 董事長兼執行長 Randy Fields 和 Repositrak 財務長 John Merrill。

Before we begin, we'd like to remind everyone that this call could contain forward-looking statements about ReposiTrak 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.

在開始之前，我們想提醒大家，本次電話會議可能包含 1995 年《私人證券訴訟改革法案》含義內有關 ReposiTrak 的前瞻性陳述。前瞻性陳述是不受歷史事實約束的陳述。此類前瞻性陳述是基於當前的信念和期望。

ReposiTrak's remarks are subject to risks and uncertainties, which 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. ReposiTrak does not assume any obligation to update information contained in this conference call.

ReposiTrak 的言論存在風險和不確定性，實際結果可能存在重大差異。該公司向美國證券交易委員會提交的文件中充分討論了此類風險。應根據此類風險考慮此處列出的資訊。ReposiTrak 不承擔更新本次電話會議中包含的資訊的任何義務。

Shortly after the market closed today, the company issued a press release overviewing the financial results that we will discuss on today's call. Investors can visit the Investor Relations section of the company's website at repositrak.com to access the press release. With all that said, I would now like to turn the call over to John Merrill. John, the call is yours.

今天收盤後不久，該公司發布了一份新聞稿，概述了我們將在今天的電話會議上討論的財務表現。投資者可以造訪該公司網站 repositrak.com 的投資者關係部分，以獲取新聞稿。話雖如此，我現在想把電話轉給約翰·梅里爾。約翰，電話是你的。

Thanks, Jeff, and good afternoon, everyone. The December quarter fiscal '24 marks another anniversary of our evolution to a simple, easy-to-model, and highly predictable business. This is what ReposiTrak is today.

謝謝傑夫，大家下午好。24 財年 12 月季度標誌著我們向簡單、易於建模和高度可預測的業務發展的另一個週年紀念日。這就是今天的 ReposiTrak。

Looking back on our strategy, our goal was to reduce unpredictable and lumpy revenue in exchange for growth in annual recurring subscription revenue and reduction in operating expenses, return capital to shareholders, pay off debt, drive cash, and make the business easy-to-model. I am confident as we again embark on execution of this new opportunity, traceability, our strategy will not change. In two to three years, as we look back, it will be more obvious that it was the right decision -- incremental recurring revenue, a careful focus on expenses, maintain margin, grow net income, and grow EPS even faster.

回顧我們的策略，我們的目標是減少不可預測和不穩定的收入，以換取年度經常性訂閱收入的增長和運營費用的減少，向股東返還資本，償還債務，驅動現金，並使業務易於開展— —模型。我相信，當我們再次踏上執行可追溯性這項新機會時，我們的策略不會改變。兩到三年後，當我們回顧過去時，會更明顯地發現這是一個正確的決定——增加經常性收入，仔細關注支出，保持利潤率，增加淨利潤，並更快地增加每股收益。

As we did some years ago with compliance, our strategy again requires us to scale quickly for the largest opportunity in the company's history: traceability. We have done it before, and we are up to the task to do it again.

正如我們幾年前在合規方面所做的那樣，我們的策略再次要求我們快速擴展，以抓住公司歷史上最大的機會：可追溯性。我們以前已經做到過，我們有能力再次做到這一點。

Before jumping into the quarterly numbers, in my view, it is important to point out to shareholders the path we forged overtime and revisit some remarkable achievements we accomplished. Since 2017, we have grown recurring revenue 10% per year on a compounded annual growth basis. Simultaneously, we increased recurring revenue from just 53% of total revenue to roughly 100% at the end of fiscal 2023.

在我看來，在進入季度數據之前，有必要向股東指出我們加班走過的道路，並回顧我們所取得的一些非凡成就。自 2017 年以來，我們的經常性收入每年複合成長 10%。同時，我們將經常性收入從佔總收入的 53% 增加到 2023 財年末的約 100%。

Despite overcoming more than $1 million in high-touch, low-opportunity revenue, the results are quite remarkable. During the same period, we reduced our operating cost by 28% or $5 million, driving an 80%-plus gross margin and more than a 25% net margin.

儘管克服了超過 100 萬美元的高接觸、低機會收入，但結果還是相當顯著的。同期，我們的營運成本降低了 28%，即 500 萬美元，毛利率提高了 80% 以上，淨利潤率提高了 25% 以上。

Since 2017, net income has grown from less than $700,000 to $5.6 million at the end of fiscal 2023, a 36% compounded annual growth rate. Full-year earnings per share was just $0.01 just a few years ago and now is $0.27 a share, a compounded annual growth rate of over 77%.

自 2017 年以來，淨利潤從不到 70 萬美元增長到 2023 財年末的 560 萬美元，複合年增長率為 36%。幾年前，全年每股收益僅為 0.01 美元，而現在為每股 0.27 美元，複合年增長率超過 77%。

Meanwhile, during the same period, annual cash from operations accelerate from just $500,000 to over $8.8 million at the end of fiscal 2023, a kegger of 51%. Meanwhile, our current ratios has grown from a mere 2x to over 6x, meaning our current assets more than cover our current liabilities over 6 times over.

同時，在同一時期，年度營運現金從 50 萬美元增加到 2023 財年末的 880 萬美元以上，增幅高達 51%。同時，我們的流動比率從僅 2 倍成長到超過 6 倍，這意味著我們的流動資產超過流動負債的 6 倍以上。

It is truly amazing to see what this little company has achieved in such a short period of time. Anyone who knows me knows that I'm not a tout. As I've said before, the proof is in the numbers. We have an extraordinary opportunity in front of us, and I believe our ongoing strategy will continue to reflect well on shareholders.

看到這家小公司在如此短的時間內所取得的成就確實令人驚訝。認識我的人都知道我不是兜售者。正如我之前所說，證據就在數字中。我們面前有一個非凡的機會，我相信我們正在進行的策略將繼續對股東產生良好的影響。

Again, we will continue to grow recurring revenue, not just traceability revenue, but continuing to grow all lines of business. We will continue to increase profits, generate cash, and return capital to shareholders, all while ramping the traceability initiative, which has the potential to more than double our top-line revenue over the next several years.

再次強調，我們將繼續成長經常性收入，不僅是可追溯性收入，而是繼續成長所有業務線。我們將繼續增加利潤、產生現金並向股東返還資本，同時增加可追溯性計劃的力度，這有可能在未來幾年使我們的營收增加一倍以上。

For several quarters, we have been discussing the FDA's FSMA 204 mandate and the impact this will have on a food industry. The FDA's mandate is right around the corner, scheduled currently for 2026, but we are now seeing industry reactions far sooner than we anticipated.

幾個季度以來，我們一直在討論 FDA 的 FSMA 204 指令及其對食品業的影響。FDA 的授權即將到來，目前定於 2026 年，但我們現在看到行業的反應比我們預期的要早得多。

The traceability mandate is increasingly being driven by the market from the top down rather than from government regulations. As we have long said, retailers want end-to-end traceability. Track and trace is a risk mitigation initiative for retailers, making it easier to identify products in the event of a recall, reducing exposure to costly lawsuits, improving overall compliance. Retailers have embraced this FDA requirement and now, you are seeing them drive adoption through their supply chain. Randy will add more color on this in a moment.

可追溯性的要求越來越多地由市場自上而下驅動，而不是由政府法規驅動。正如我們長期以來所說，零售商希望實現端到端的可追溯性。追蹤和追蹤是零售商的一項風險緩解舉措，可以在召回時更輕鬆地識別產品，減少昂貴的訴訟風險，並提高整體合規性。零售商已經接受了 FDA 的這項要求，現在，您可以看到他們透過供應鏈推動採用。蘭迪稍後會對此添加更多色彩。

For us, the demand for traceability is rapidly accelerating as you have seen in our steady cadence of press releases, announcing suppliers joining the RTN. There are many, many more in the queue. The revenue from these suppliers is currently 3% to 4% of our quarterly revenue, up from just 1% to 2% six months ago.

對我們來說，可追溯性的需求正在迅速增長，正如您在我們宣布供應商加入 RTN 的新聞稿中所看到的那樣。隊列中還有很多很多。目前，來自這些供應商的收入占我們季度收入的 3% 至 4%，而六個月前僅為 1% 至 2%。

As you've seen, we are investing heavily in sales and marketing, both headcount and advertising awareness to process the pipeline. The current queue will take us about a year to process based on how quickly suppliers move and more are being added to the pipeline every day.

正如您所看到的，我們在銷售和行銷、人員數量和廣告宣傳方面投入了大量資金來處理管道。目前的隊列將需要我們大約一年的時間來處理，這取決於供應商移動的速度以及每天都會有更多的供應商添加到管道中。

It is important to note that once we have worked through this initial onboarding process, incremental additions will generate with very little added cost. Again, we've been through this process before with our compliance solution.

值得注意的是，一旦我們完成了這個初步的入職流程，增量添加就會產生很少的額外成本。同樣，我們的合規性解決方案之前已經經歷過這個過程。

We have onboarded hundreds of traceability suppliers since we began this journey in April of 2023. The current acceleration further validates our decision to clear the decks, pulling resources off non-core, high-touch, low-opportunity business and reallocate them to much longer term, lucrative, and time-sensitive traceability revenue.

自 2023 年 4 月開始這趟旅程以來，我們已經與數百家可追溯供應商合作。目前的加速進一步驗證了我們清理甲板的決定，將資源從非核心、高接觸、低機會業務中剝離出來，並將其重新分配給更長期、利潤豐厚且對時間敏感的可追溯收入。

This decision is enabling us to quickly capture market share, further reinforce the moats around our business, make the RTN the best, low-cost, and only choice. Over the next year, investors will see this decision once again manifest into accelerated revenue growth, net margin expansion, and much higher levels of cash generation.

這項決定使我們能夠快速佔領市場份額，進一步強化我們業務的護城河，使 RTN 成為最佳、低成本且唯一的選擇。明年，投資者將看到這項決定再次體現為收入加速成長、淨利潤擴張以及更高水準的現金產生。

Let's get to the quarterly numbers. Total revenue was up 8% for the December quarter. Recurring revenue was 99% of total revenue. Recurring revenue increased 8% for the quarter. Operating expenses increased 9% as we invested heavily in the RTN.

讓我們來看看季度數據。12 月所在季度的總營收成長 8%。經常性收入佔總收入的99%。本季經常性收入成長 8%。由於我們對 RTN 進行了大量投資，營運費用增加了 9%。

G&A costs were up 8%. GAAP net income increased 15%. GAAP net income to common shareholders increased 17%. Earnings per share increased 17% to $0.07 per share. Quarterly cash from operations was $1.3 million, and we continue to return capital to shareholders.

一般管理費用上漲 8%。GAAP 淨利成長 15%。普通股股東的 GAAP 淨利成長 17%。每股收益成長 17%，達到每股 0.07 美元。季度營運現金為 130 萬美元，我們繼續向股東返還資本。

During the December quarter, we bought back approximately 22,000 common shares at an average share price of $8.79 per share for approximately $194,000. We also bought back 70,000 preferred shares for a stated redemption price of $10.70 per share for a total of $750,000.

在 12 月季度，我們以每股 8.79 美元的平均股價回購了約 22,000 股普通股，回購價格約為 194,000 美元。我們也以每股 10.70 美元的規定贖回價回購了 70,000 股優先股，總計 750,000 美元。

We have over $23 million cash in the bank and no debt. And we continue to pay a quarterly cash dividend boosting at 10%, as you saw the Board approved in November of 2023.

我們銀行裡有超過 2,300 萬美元的現金，沒有債務。正如董事會在 2023 年 11 月批准的那樣，我們繼續支付 10% 的季度現金股利。

As we've said, our profitability and cash will continue to grow. Consistent with our strategy, our focus is on increasing operating leverage. This requires us to continue to make strategic decisions to drive high-margin, incremental revenue, while keeping costs in line and driving profitability and cash.

正如我們所說，我們的獲利能力和現金將繼續成長。根據我們的策略，我們的重點是提高營運槓桿。這要求我們繼續做出策略決策，以推動高利潤、增量收入，同時保持成本控制並提高獲利能力和現金。

As I previously announced, we ended our June 30, 2023 fiscal year with an exit rate of annual recurring revenue of $20.3 million, meaning as of June 30, 2023, those contracts in hand billing monthly times 12 will generate $20.3 million in annual recurring revenue in the subsequent 12 months. At the end of September, that number increased to $20.8 million. And at the end of the December quarter, our exit rate of annual recurring revenue increased to $21.4 million.

正如我之前宣布的，我們在2023 年6 月30 日結束的財政年度結束時，年度經常性收入的退出率為2030 萬美元，這意味著截至2023 年6 月30 日，這些每月計費的合約乘以12 將產生2030 萬美元的年度經常性收入在接下來的12個月。9 月底，這一數字增至 2,080 萬美元。截至 12 月季度末，我們的年度經常性收入退出率已增至 2,140 萬美元。

Once again, this means barring any unforeseen changes as of December 31, 2023, contracts in hand billing monthly times 12 will generate $21.4 million in annual recurring revenue in the subsequent 12 months. Keep in mind, this is the subsequent 12 months and not a forecast for the quarter ending June 30, 2024.

這再次意味著，截至2023 年12 月31 日，除非出現任何不可預見的變化，按月計費的現有合約乘以12 將在接下來的12 個月內產生2140 萬美元的年度經常性收入。請記住，這是接下來的 12 個月，而不是截至 2024 年 6 月 30 日的季度的預測。

I believe the momentum we are seeing with traceability customers faster than I anticipated will only accelerate further. We're confident the traceability will generate even more meaningful revenue in the next 12 months.

我相信，我們在可追溯性客戶方面看到的勢頭比我預期的更快，只會進一步加速。我們相信，可追溯性將在未來 12 個月內產生更有意義的收入。

They have said time and time again, it takes approximately $12 million in cash to run this place. Even with our investment on RTN during the six months ended December 31, 2023, our gross margin and net margins still remains above 80% and 25%, respectively.

他們一再表示，經營這個地方需要大約 1,200 萬美元的現金。即使我們在截至 2023 年 12 月 31 日的六個月內對 RTN 進行投資，我們的毛利率和淨利潤率仍分別保持在 80% 和 25% 以上。

Again, our strategy remains very simple. Take great care of the customer; grow recurring revenue; rationalizing costs with the opportunity of future revenues; control costs; increase net income; accelerate EPS; buy back shares, both common and preferred; drive cash; and return capital to shareholders in the form of a cash dividend.

同樣，我們的策略仍然非常簡單。非常照顧顧客；增加經常性收入；利用未來收入的機會使成本合理化；控製成本；增加淨收入；加速每股收益；回購普通股和優先股；推動現金；並以現金股利的形式向股東返還資本。

Turning to the quarterly numbers, fiscal year 2024, second quarter revenue was $5.1 million, up 8% from $4.8 million in the same quarter last year. Effectively all of our revenue was recurring, more than 99%.

轉向季度數據，2024 財年第二季營收為 510 萬美元，較去年同季的 480 萬美元成長 8%。實際上，我們所有的收入都是經常性的，超過 99%。

Recurring revenue contribution from traceability customers increased from 1% to 2% of total revenue in the June quarter to 3% to 4% of total revenue in the December quarter. Total operating expenses increased 9% to $3.9 million in Q2 2024, which I already commented on. G&A expense increased 8% due largely to higher costs and employee benefits, liability insurance, and compliance costs associated with security, confidentiality, and other requirements to protect customer data.

來自可追溯性客戶的經常性收入貢獻從 6 月季度總收入的 1% 至 2% 增加到 12 月季度總收入的 3% 至 4%。2024 年第二季度，總營運支出增加了 9%，達到 390 萬美元，我已經對此發表過評論。一般管理費用增加 8%，主要是由於成本和員工福利、責任保險以及與安全、保密和保護客戶資料的其他要求相關的合規成本增加。

For the second fiscal quarter of 2024, GAAP net income was $1.5 million or 28% of revenue versus $1.3 million or 27% of revenue. GAAP net income increased year over year by 14%. Net income to common shareholders was $1.3 million or $0.07 per common share based on 18.2 million weighted average shares versus $1.1 million or $0.06 per common share based on 18.4 million weighted average shares. Shareholders should also take note that we reduced our capitalization by over 10% as we initiated our stock buyback plan some four years ago.

2024 年第二財季，公認會計準則淨利為 150 萬美元，佔營收的 28%，而這一數字為 130 萬美元，佔營收的 27%。GAAP 淨利潤年增 14%。普通股股東的淨利為130 萬美元，即每股普通股0.07 美元（基於1,820 萬股加權平均股），而淨利為110 萬美元，即每股普通股0.06 美元（基於1,840 萬股加權平均股）。股東也應注意，大約四年前我們啟動股票回購計畫時，我們的資本減少了 10% 以上。

Turning to six-month numbers, revenue for the six months ended December 31, 2023, increase of $10.2 million, up from $9.5 million in the same period of 2022. Total operating expenses increased 10% from $7.1 million to $7.8 million.

談到六個月的數據，截至 2023 年 12 月 31 日的六個月的收入增加了 1,020 萬美元，高於 2022 年同期的 950 萬美元。總營運費用增加了 10%，從 710 萬美元增加到 780 萬美元。

Net income increased 11% to $2.8 million. Net income to common shareholders increased 12.4% to $2.6 million. And earnings per share increased 18% from $0.12 a share in 2022 to $0.14 per share for the six months ended December 31, 2023.

淨利潤成長 11%，達到 280 萬美元。普通股股東淨利成長 12.4%，達到 260 萬美元。截至2023年12月31日止六個月，每股盈餘從2022年的每股0.12美元成長18%至每股0.14美元。

Turning now to cash flow and cash balances, total cash at December 31, 2023, was $23.3 million compared to $24 million at the end of fiscal year 2023. Total cash reflects repurchasing over 2.2 million common shares, redeeming 70,000 preferred shares in the quarter, paying off over $6 million in bank debt and returning over $1.4 million to shareholders in the form of a cash dividend since inception.

現在轉向現金流和現金餘額，截至 2023 年 12 月 31 日的現金總額為 2,330 萬美元，而 2023 財年末為 2,400 萬美元。自成立以來，現金總額反映了回購超過 220 萬股普通股、贖回 70,000 股優先股、償還超過 600 萬美元的銀行債務以及以現金股息的形式向股東返還超過 140 萬美元。

Fiscal year to date, we generated cash from operations of $2.5 million. In the second quarter, we repurchased approximately 22,000 common shares at an average price of $8.79 per share for a total of approximately $194,000.

財年至今，我們從營運中產生了 250 萬美元的現金。第二季度，我們以每股 8.79 美元的平均價格回購了約 22,000 股普通股，總計約 194,000 美元。

The company has approximately $8.3 million remaining on the $21 million total buyback authorization. During the same period, we repurchased 70,000 preferred shares, the stated redemption price of $10.70 per share for a total of $750,000. The remaining amount of the preferred stock redemption is $8.2 million.

該公司在 2,100 萬美元的回購授權總額中還剩約 830 萬美元。同期，我們回購了 70,000 股優先股，規定贖回價為每股 10.70 美元，總計 750,000 美元。優先股贖回的剩餘金額為 820 萬美元。

As previously announced, the company anticipates redeeming all of the preferred issued and outstanding over the next three years. We paid out our December 31 quarterly cash dividend on February 1, 2024.

正如先前宣布的，該公司預計在未來三年內贖回所有已發行和已發行的優先股。我們於 2024 年 2 月 1 日支付了 12 月 31 日的季度現金股利。

As we previously announced, subsequent quarterly cash dividends will be paid within 45 days of the quarter's end of March 31, June 30, September 30, and December 31. Again, we will take half the annual cash generated from operations and return it to shareholders in the form of a dividend, buying back additional shares of common and preferred shares or increasing the dividend, whichever lever makes the most sense at that time. The other half goes in the bank and will be strategically used to fund initiatives like traceability or M&A opportunities if the right opportunity comes along.

正如我們先前所宣布的，後續季度現金股利將在3月31日、6月30日、9月30日和12月31日季結束後45天內支付。同樣，我們將把每年營運產生的現金的一半以股息的形式返還給股東，回購額外的普通股和優先股或增加股息，以當時最有意義的方式為準。另一半存入銀行，如果有合適的機會，將策略性地用於資助可追溯性或併購機會等措施。

From time to time, the Board will continue to evaluate our capital allocation strategy and may adjust to different levers whichever lever is more favorable to shareholders at that time. That's all I have today. Thanks, everyone for your time. At this point, I'll pass the call over to Randy. Randy.

董事會將不時繼續評估我們的資本配置策略，並可能調整至不同槓桿，以當時對股東更有利的槓桿為準。這就是我今天所擁有的一切。謝謝大家抽出時間。此時，我會將電話轉給蘭迪。蘭迪。

Thanks, John. The traceability opportunity is growing very, very quickly, certainly faster than we anticipated. Our decision to clear the decks and focus on what a world with traceability could mean for us was clearly the right decision. We worked extremely hard over the past year to establish our position in the market, to secure endorsements in collaboration with industry leaders and capture a foothold with major retailers and distributors. That's working, to say the least. We continue to be the only company actually doing traceability, while others are still only talking about it.

謝謝，約翰。可追溯性機會的成長非常非常快，肯定比我們預期的還要快。我們決定清理一切並專注於可追溯的世界對我們意味著什麼，這顯然是正確的決定。在過去的一年裡，我們非常努力地建立我們的市場地位，獲得與行業領導者的合作認可，並在主要零售商和分銷商中站穩腳跟。至少可以說，這是有效的。我們仍然是唯一一家真正進行可追溯性的公司，而其他公司仍然只是說說而已。

Meanwhile, the overall opportunity is expanding. Kroger, the largest grocery chain in the US recently announced to its supply chain that all suppliers, not just those impacted by FSMA 204, but all food suppliers must comply with Kroger's traceability framework.

同時，整體機會正在擴大。美國最大的雜貨連鎖店克羅格最近向其供應鏈宣布，所有供應商，不僅僅是受 FSMA 204 影響的供應商，而是所有食品供應商都必須遵守克羅格的可追溯框架。

Boom. This announcement dramatically changes everything because this will set the food safety bar for other retailers. This is perhaps the most significant change in the history of the retail food industry, and we are seriously center-stage for it.

繁榮。這項公告極大地改變了一切，因為這將為其他零售商設定食品安全標準。這也許是零售食品產業史上最重大的變化，我們正處於其中的中心舞台。

We're not doing traceability for Kroger per se, but we're helping Kroger suppliers meet Kroger's requirement. As we've expected, this statement by Kroger demonstrates that large retailers simply aren't going to sort incoming deliveries trying to figure out which pallet on which truck is impacted by rule 204 and which ones are not.

我們並不是為克羅格本身進行追溯，而是幫助克羅格供應商滿足克羅格的要求。正如我們所預料的，克羅格的這一聲明表明，大型零售商根本不會對收到的貨物進行分類，試圖找出哪輛卡車上的哪個托盤受到 204 規則的影響，哪些不受影響。

Labor is one of the biggest costs for these retailers, so adding more people to figure out which box has to be treated one way and which box has to be treated another way makes no operational, nor frankly, financial sense. The idea is a nonstarter.

勞動力是這些零售商最大的成本之一，因此增加更多的人來弄清楚哪個盒子必須以一種方式處理，哪個盒子必須以另一種方式處理，這在運營上沒有任何意義，坦率地說，在財務上也沒有意義。這個想法是不可能的。

Instead, Kroger and soon others were convinced, are mandating that their suppliers are going to trace everything, streamlining the process down to one way to handle product. As we have believed for some time, that will become the standard for the industry. Moreover, Kroger is mandating this has to be done by June 30, 2025, a full six months ahead of the FDA deadline; in short, more and sooner.

相反，克羅格和其他人很快就確信，他們要求供應商追蹤一切，將流程簡化為一種處理產品的方式。正如我們一段時間以來所相信的那樣，這將成為行業的標準。此外，克羅格要求必須在 2025 年 6 月 30 日之前完成這項工作，比 FDA 的最後期限提前了整整六個月；簡而言之，更多、更快。

So what we're doing to traceability is no longer being driven by regulation alone, but more importantly, by the market, a far more powerful force. Retailers care much more about competitive threats and simply regulatory requirements -- right out of our playbook.

因此，我們在可追溯性方面所做的工作不再僅由監管驅動，更重要的是由市場這更強大的力量所驅動。零售商更關心競爭威脅和簡單的監管要求——這正是我們的策略。

So let's look at where we are. First. we said the industry would ultimately move more quickly than the FDA. The stampede is on the horizon, as I'm sure you've seen illustrated in our numerous press releases in the past few months. The Kroger date moves the goalpost up rather than back. It's truly amazing.

那麼讓我們看看我們現在在哪裡。第一的。我們說過該行業最終會比 FDA 更快採取行動。踩踏事件即將發生，我相信您已經在過去幾個月的眾多新聞稿中看到了這一點。克羅格日期將球門柱向上而不是向後移動。這真是太神奇了。

Second, we said that the industry likely needs more time as the requirements are technically challenging, complex, and require significant adjustments to how suppliers and retailers do logistics. The issue though is no longer one of FDA relief, it's now a market-driven problem. The scope and pressure of market forces will be far, far greater than the FDA compliance requirements. Think about this, when Kroger is the only retailer able to say, we trace everything we sell to you to ensure its safety, ouch, others will speed up rather than slow down.

其次，我們表示，該行業可能需要更多時間，因為這些要求在技術上具有挑戰性、複雜性，並且需要對供應商和零售商的物流方式進行重大調整。不過，這個問題不再是 FDA 的救濟問題，而是由市場驅動的問題。市場力量的範圍和壓力將遠大於 FDA 的合規要求。想想看，當克羅格是唯一一個零售商能夠說，我們追蹤我們賣給你的所有東西以確保其安全時，哎喲，其他人會加速而不是減速。

Third, we said the FDA mandate would serve only as a starting point and ultimately, traceability will impact a far larger segment of the industry. Again, Kroger makes that point moot. The bar is now set and trace-it-all will be the preferred way to do business. That is exactly what we expected would happen, and it's happening now, not later.

第三，我們說過 FDA 的強制要求只是一個起點，最終，可追溯性將影響該產業更廣泛的領域。克羅格再次表明這一點毫無意義。現在標準已定，全程追蹤將成為開展業務的首選方式。這正是我們所期望的，而且現在就發生了，而不是以後。

As a result, our work with traceability is exploding. It is a monumental task that we have overcome before with our compliance business, and we're ready to scale once again with traceability. As you may recall, when we began in the compliance business, we moved in the first year from 200 connected suppliers to year two where we did 2,500 and year three where we did nearly 10,000, and today we have over 100,000 facilities in our compliance network. The cadence for traceability is likely to be quite similar, but the point is we've been there, done that before in terms of scaling.

因此，我們的可追溯性工作呈現爆炸性成長。這是我們先前透過合規業務克服的艱鉅任務，我們已準備好透過可追溯性再次擴大規模。您可能還記得，當我們開始開展合規業務時，我們在第一年從200 個互聯供應商轉移到第二年，我們做了2,500 個供應商，第三年我們做了近10,000 個供應商，如今，我們的合規網路中有超過100,000 個設施。可追溯性的節奏可能非常相似，但重點是我們已經做到了這一點，之前在擴展方面已經做到了這一點。

We now have hundreds of supplier facilities onboarded in our ReposiTrak traceability network or RTN, as we call it, and 1,000 more in the queue awaiting implementation. Our current name customers have the potential to bring an additional 3,000 or more supplier facilities into the on-boarding queue within the next six months. And beyond that, our pipeline of new wholesalers and retailers is very deep and very wide.

現在，我們的 ReposiTrak 追溯網路或 RTN（我們稱之為 RTN）中已有數百個供應商設施，還有 1,000 個供應商設施正在等待實施。我們目前的知名客戶有可能在未來六個月內將額外的 3,000 個或更多供應商設施納入入職隊列。除此之外，我們的新批發商和零售商通路非常深入且廣泛。

The recurring revenue from this is more than we'd anticipated at this point, but it's still just 3% to 4% of our revenue. The work we have to do on the back end is significant and complex. And in response, we're laser-focused on the internal systems that we're going to need, and I'm confident that the team is up to the task. As I've said, we've done this before.

由此產生的經常性收入超出了我們目前的預期，但仍只占我們收入的 3% 到 4%。我們在後端要做的工作是重要且複雜的。作為回應，我們將重點放在我們需要的內部系統上，我相信團隊能夠勝任這項任務。正如我所說，我們以前已經這樣做過。

At this point, the current traceability queue represents about $3.6 million in additional annual recurring revenue that will be booked sometime in the next year. We expect revenues to accelerate and ultimately double our annual recurring revenue within the next two to three years. The overall opportunity is significantly larger than we expected, but barring something major and unforeseen, the next few years looks to be very promising for ReposiTrak and its shareholders. By the way, this might prove to be the biggest understatement of my career.

目前，目前的可追溯性隊列代表了約 360 萬美元的額外年度經常性收入，這些收入將在明年的某個時候預訂。我們預計收入將加速成長，並最終在未來兩到三年內將我們的年度經常性收入翻倍。整體機會比我們預期的要大得多，但除非發生重大且不可預見的事情，未來幾年對於 ReposiTrak 及其股東來說似乎非常有希望。順便說一句，這可能是我職業生涯中最輕描淡寫的一句話。

Keep in mind end-to-end traceability is not new for us. The foundation for it's been in our wheelhouse for many years. This is why we've gotten such a lead while others are still talking about traceability with futurist and blockchain buzzwords and absurd startup-type technologies, along with their lethargic balance sheets. There's the capital and little if any, operating history in our space.

請記住，端到端的可追溯性對我們來說並不新鮮。它的基礎多年來一直在我們的駕駛室裡。這就是為什麼我們已經取得瞭如此領先，而其他人仍在用未來主義和區塊鏈流行語、荒謬的初創型技術以及他們昏昏欲睡的資產負債表來談論可追溯性。我們的領域有資本，但幾乎沒有營運歷史。

Each day that passes, as additional suppliers sign into our network, the RTN extends its lead, reinforcing and expanding the moats around our business. One way to think about our lead is that no one else has done traceability yet with any suppliers end-to-end, while at the same time, at this moment, we're doing it with hundreds and soon thousands of facilities. Dominant doesn't do justice, actually, to where we are.

每過一天，隨著更多供應商登入我們的網絡，RTN 就會擴大其領先地位，加強和擴大我們業務的護城河。思考我們領先地位的一種方式是，還沒有其他人對任何供應商進行端到端的可追溯性，而與此同時，此時此刻，我們正在對數百個甚至數千個設施進行追踪。實際上，主導並沒有公正地對待我們所處的位置。

We've been deep in the food supply chain for a long time. There's very little in terms of problems and issues that we haven't already dealt with. We are, unlike anyone else that the Boston Consulting Group would say, we are way, way down the experience curve. Others are simply at this point trying to get to the starting blocks.

我們長期以來一直深入食品供應鏈。我們還沒有處理過的問題和議題很少。與波士頓顧問集團所說的任何其他人不同，我們在經驗曲線上已經走得很遠了。其他人此時只試圖起步。

It is though important to remember that most suppliers will end up with more than one system that they use. And as a result, it's not a pure market share gain. So in some sense, a competitive threat isn't a real important consideration for us.

但重要的是要記住，大多數供應商最終都會使用多個系統。因此，這並不是純粹的市佔率成長。因此，從某種意義上來說，競爭威脅對我們來說並不是一個真正重要的考慮因素。

It's important for us to get essentially every supplier that exists, potentially, seriously more than 100,000 facilities, and that others may get many suppliers as well. Our business model was built under the assumption that suppliers will likely end up with more than one system that their supply chain requires.

對我們來說，重要的是要獲得幾乎所有現有的供應商（可能超過 100,000 個設施），而且其他公司也可能獲得許多供應商。我們的商業模式是在這樣的假設下建立的：供應商最終可能會擁有其供應鏈所需的多個系統。

As you've seen in our numbers, we have and we'll continue to spend carefully on sales and marketing to support the RTN, and we'll do whatever is necessary to stay in our customer-centric position. Our customer success has always been and continues to be priority one.

正如您在我們的數據中看到的那樣，我們已經並將繼續在銷售和行銷方面謹慎投入以支持 RTN，並且我們將採取一切必要措施來保持以客戶為中心的立場。我們的客戶成功始終是並將繼續是第一要務。

While we are laser-focused on traceability, it's important to point out that our legacy compliance and supply chain businesses will continue to grow and generate increased cash flow. The sustainability and predictability of our recurring revenue base business model is clear and very powerful.

雖然我們高度關注可追溯性，但必須指出的是，我們的傳統合規和供應鏈業務將繼續成長並產生更多的現金流。我們的經常性收入基礎業務模式的可持續性和可預測性是明確且非常強大的。

Our annual recurring revenue hovers pretty close to 2 times our fixed costs and simultaneously supports our return of capital to shareholders. Despite our sunsetting of certain high-touch, low-opportunity revenue over the past 24 months, to the tune of over $1 million annual so far, we've grown annual recurring revenue, grown GAAP net income even more, grown earnings per share even faster, and expanded our cash generation.

我們的年度經常性收入非常接近固定成本的兩倍，同時支持我們向股東返還資本。儘管我們在過去24 個月中取消了某些高接觸性、低機會的收入，迄今為止每年的收入已超過100 萬美元，但我們的年度經常性收入、公認會計準則淨利潤和每股收益均有所成長。更快，並擴大了我們的現金產生能力。

So to summarize, one, we'll continue because we always have to take great care of our customers. The competitive advantage this brings to traceability is even greater than our advantage in other services. Two, we've built a consistent cash generation machine with multiple consecutive years GAAP profitability, cash generation, and frankly, lots of return of capital to shareholders, as I'm sure you know.

總而言之，第一，我們將繼續下去，因為我們始終必須照顧好我們的客戶。這為追溯帶來的競爭優勢甚至比我們在其他服務上的優勢還要大。第二，我們已經建立了一個穩定的現金生成機器，連續多年實現公認會計原則盈利、現金生成，坦白說，為股東帶來了大量資本回報，我相信你知道。

We continue to deploy our capital allocation strategy, buying back stock of common and preferred, paying the dividend, and growing our cash. As we did last year, the Board will periodically review the capital allocation strategy, adjusting the dividend and the other levers we have based on our cash generation, earnings per share, just as they did with the dividend in November of 2023.

我們繼續部署我們的資本配置策略，回購普通股和優先股，支付股息，並增加我們的現金。正如我們去年所做的那樣，董事會將定期審查資本配置策略，根據我們的現金產生量、每股收益調整股息和其他槓桿，就像他們在 2023 年 11 月對股息所做的那樣。

As our results grow, we expect to increase the dividend, the same time, continuing to add cash to the balance sheet, further reinforcing our financial position. We maintain a fortress balance sheet with more than $23 million of cash and no debt, even after the last few years of buying back 2 million shares of common stock, paid off $6 million in the bank and other debt, and redeeming with preferred and paying out a cash dividend.

隨著我們業績的成長，我們預計會增加股息，同時繼續在資產負債表中添加現金，進一步鞏固我們的財務狀況。即使在過去幾年回購了200 萬股普通股、還清了600 萬美元的銀行債務和其他債務、並以優先股贖回並支付了債務之後，我們仍維持著堡壘般的資產負債表，現金超過2,300 萬美元，沒有任何債務。派發現金股利。

I think it's safe to say we have no need for more capital to be successful. Instead, we'll continue to focus on our customers. As John and I have said before, our business is efficient, easy-to-model, and we're positioned to scale. We've done it before. We're up to the task of doing it again.

我認為可以肯定地說，我們不需要更多的資本就能成功。相反，我們將繼續關注我們的客戶。正如約翰和我之前所說，我們的業務高效、易於建模，而且我們的定位是擴大規模。我們以前已經做過了。我們有能力再次做到這一點。

The net financial result is simple, faster recurring revenue growth, even faster net income growth and faster yet EPS growth, meanwhile increasing the dividend to shareholders, reducing our capitalization and driving cash. So with that, I'd like to open it up now for questions. Operator.

淨財務結果很簡單，經常性收入成長更快，淨利潤成長更快，每股盈餘成長更快，同時增加股東股息，減少我們的資本並推動現金成長。因此，我現在想打開它來提問。操作員。

(Operator Instructions) Thomas Forte, private investor.

（操作員說明）Thomas Forte，私人投資者。

Great, thanks. Randy and John, congrats on the quarter. I have four questions. I'll mostly go one at a time. I might group the last two. So you talked about this at length. I'm just hoping you could maybe simplify and clarify, are you getting faster at onboarding? Will the rate of improvement be linear going forward? Is there something you can do that will result in a step function improvement in the rate?

萬分感謝。蘭迪和約翰，祝賀這個季度。我有四個問題。我主要是一次去一個。我可以將最後兩個分組。所以你詳細地談論了這個問題。我只是希望您可以簡化和澄清，您的入職速度是否更快？未來的改善率會是線性的嗎？您可以做些什麼來提高速率的階躍函數嗎？

The answer is definitely getting faster, markedly faster, and nowhere near where we need to be. So we have probably the best minds in the company focused on automation, education strategies to speed up the process. So we're hoping that a year from now, our onboarding is going at roughly 10x where we are today, maybe even more.

答案肯定是越來越快，明顯更快，但離我們需要的地方還差得很遠。因此，我們可能擁有公司中最優秀的人才，專注於自動化和教育策略，以加快這一進程。因此，我們希望一年後，我們的入職率大約是現在的 10 倍，甚至更多。

As I say, we've done that before. This is a slightly different kind of problem. There's a little bit more data that has to move them (technical difficulty) we were doing our compliance work, but we're really, really, really good at this. So I'll be surprised if a year from now, the onboarding rate isn't up by 10, at least a factor of 10 from where we are today.

正如我所說，我們以前已經這樣做過。這是一個稍微不同的問題。我們正在做合規工作，還有更多的數據需要移動他們（技術難度），但我們真的非常非常擅長這一點。因此，如果一年後入職率沒有提高 10 倍（至少比現在提高 10 倍），我會感到驚訝。

All right, well, that was a great answer, Randy. Maybe I'll just throw in the rest of my questions. All right, so on the efforts to upgrade the customer set, is that a permanent initiative or is there a definitive timeframe where you go through the process and you're done? In which case, how far along are you?

好吧，蘭迪，這是一個很好的答案。也許我會提出剩下的問題。好吧，那麼關於升級客戶集的努力，這是一個永久性的舉措，還是有一個明確的時間框架來完成整個過程並完成？在這種情況下，你已經走了多遠？

Well, from where we originally set out about two years ago in terms of winnowing out high-touch, low-margin, not much upside opportunity, we're pretty much done. It will have a significant impact, perhaps another few percent. But given the acceleration that we're seeing candidly in our work around the issue of traceability, it will not have the kind of impact that one would be concerned about.

嗯，從我們兩年前最初開始篩選高接觸、低利潤、沒有太多上升機會的情況來看，我們已經差不多完成了。它將產生重大影響，也許還會產生幾個百分點的影響。但考慮到我們在圍繞可追溯性問題的工作中坦率地看到的加速，它不會產生人們所擔心的那種影響。

So as contracts come up that we just don't think have the opportunity, we'll probably continue to winnow those out, but it will not be significant. It's mostly behind us. It's probably 80% behind us now. That's just off-the-top-of-my-head guess.

因此，當我們認為沒有機會簽訂合約時，我們可能會繼續篩選出這些合同，但這不會很重要。它大部分都在我們身後。現在可能已經落後我們80%了。這只是我的一時興起的猜測。

It was really strategic as we saw traceability. If you think about what we did, we saw the opportunity in traceability. We realized that it would become a food-centric kind of opportunity for us, so we looked at lots of things that we were doing, not frankly based on food and that's for the most part what we've eliminated. So it was a lucky decision. I think it's fair to say, but it's been very impactful.

當我們看到可追溯性時，這確實具有戰略意義。如果您考慮一下我們所做的事情，我們就會看到可追溯性方面的機會。我們意識到這對我們來說將成為一種以食物為中心的機會，所以我們研究了我們正在做的很多事情，坦率地說不是基於食物，而這在很大程度上是我們已經消除的。所以這是一個幸運的決定。我認為這樣說是公平的，但它的影響非常大。

I think we mentioned in one previous conference call that we needed the time to focus people on the opportunity on how to onboard the suppliers. And I think as we mentioned that we're right in the middle of it now, had we not done this, I don't think we'd stand a chance of speeding up with the way we expect. So it was a good call, maybe a lucky call, but certainly a good one.

我想我們在之前的一次電話會議中提到，我們需要時間讓人們專注於如何加入供應商的機會。我認為，正如我們所提到的，我們現在正處於其中，如果我們不這樣做，我認為我們沒有機會以我們預期的方式加速。所以這是一個很好的決定，也許是一個幸運的決定，但肯定是一個好的決定。

This one sort of piggybacks on your comments on food but it also it diverges a little, so I'll go two parts. So, can you give your current thoughts on expanding into new or adjacent markets, which is QSRs, so that would be food-related, and then health care, not food-related but compliance related?

這有點依賴你對食物的評論，但也有一點分歧，所以我會分成兩部分。那麼，您能否給出您當前關於擴展到新的或鄰近市場（即 QSR）的想法，以便與食品相關，然後是醫療保健，而不是與食品相關，但與合規相關？

Okay, I think the first thing to realize is that when we thought about rule 204 -- and this was an error we made in looking into the future, rule 204 from the FDA covers, call it 5% to 7% of the food products that go through a supermarket. Keep that number in mind, 5% to 7%. What just happened is, the industry said we're going to go from 5% to 7% to 100%.

好的，我認為首先要認識到的是，當我們考慮第 204 條規則時——這是我們在展望未來時犯下的一個錯誤，FDA 的第 204 條規則涵蓋了 5% 到 7% 的食品經過一家超市。記住這個數字，5% 到 7%。剛剛發生的事情是，業界表示我們將從 5% 上升到 7%，再到 100%。

So you can work the numbers out. It's between a 15 and 20-time expansion of the size of the opportunity, and frankly, a more difficult part of the opportunity, because most of the participants that are going to have to do traceability had never thought of it. They hadn't considered it because they were exempt from the rule. But they were part of it, and now they're part of the competitive aspect of doing traceability.

這樣你就可以算出數字了。這是機會規模擴大15到20倍之間，坦白說，這是機會中更困難的部分，因為大多數要做追溯的參與者從來沒有想到這一點。他們沒有考慮這一點，因為他們不受該規則的約束。但他們曾經是其中的一部分，現在他們是可追溯性競爭的一部分。

So just in the grocery space, the opportunity is more than one order of magnitude larger than we guessed. That means that our appetite for our other vertical markets is shrinking. On the other hand, most of the suppliers that we work with in retail food, if you will, in the grocery space, also do work in each of those other vertical markets.

因此，僅在雜貨領域，機會就比我們的猜測大一個數量級以上。這意味著我們對其他垂直市場的興趣正在萎縮。另一方面，如果你願意的話，我們在零售食品領域合作的多數供應商，在雜貨領域，也在其他垂直市場中開展工作。

So we may not be end-to-end in the QSR and other spaces. We will be end-to-end in grocery, but we may be from end-to-middle in terms of the other segments of places where food is consumed. So it's not a missed opportunity, it's that the one that we're in just grew by 10 times, maybe more. In fact, it's certainly more than 10 times.

因此，我們在 QSR 和其他領域可能不是端到端的。我們將在雜貨店實現端到端，但在食品消費場所的其他部分，我們可能會實現端到端。所以這並不是錯失的機會，而是我們所處的機會成長了 10 倍，甚至更多。事實上，肯定超過10倍。

All right, and then I wanted to make this distinct from the last question. So -- and this is more a reflection of the potential companies you'd acquire, and then given the health of the economy, interest rates, and inability to raise capital, et cetera, et cetera. So lastly, can you give your current thoughts on M&A opportunities?

好吧，然後我想把這個問題與上一個問題區分開來。所以——這更反映了你將收購的潛在公司，然後考慮到經濟的健康狀況、利率和籌集資金的能力等等。最後，您能談談您目前對併購機會的看法嗎？

Well, I think for us, not much has changed. If the right opportunity presents itself, it could be somebody who has what we might be looking for in terms of a customer set in an adjacent space that wouldn't distract our management team significantly. That would be interesting and opportunistic for us.

嗯，我認為對我們來說，沒有太大改變。如果合適的機會出現，他可能會擁有我們可能正在尋找的相鄰空間的客戶群，而不會顯著分散我們管理團隊的注意力。這對我們來說很有趣並且是機會主義的。

But I mean, we're seeing things all the time now around some bozo who has some great idea for traceability, a widget that's connected to the blockchain that attaches to a SpaceX rocket, that kind of stuff, they are now running out of money. None of that is of interest to us.

但我的意思是，我們現在經常看到一些笨蛋對可追溯性有一些好主意，一個連接到區塊鏈的小部件，連接到 SpaceX 火箭，諸如此類的東西，他們現在已經沒錢了。我們對這些都沒興趣。

So conceptually, we do have a tiger by the tail, which we said something, maybe it wasn't clear in both John's and Randy's remarks that it is perfectly reasonable in the next two to three years. The top line revenue of the company will double. We will go from being a $20-million a year company to $40 million in two to three years. That's a lot. It requires incredible customer focus. It requires equally a huge amount of automation of what we're doing.

所以從概念上講，我們確實有一隻老虎在尾巴上，我們說過一些話，也許約翰和蘭迪的言論都沒有明確表明在未來兩到三年內這是完全合理的。公司的總收入將翻倍。我們將在兩到三年內從一家年收入 2,000 萬美元的公司增加至 4,000 萬美元。好多啊。它需要令人難以置信的客戶關注。它同樣需要我們正在做的事情來實現大量自動化。

So we have plenty on our plate. Our best and brightest are literally day by day working on how do we do this at a much higher level of scale. So it's going to be an exciting time and hopefully, the investors in the company see what we're doing and feel good about it. It is a huge opportunity, much greater than we expected. I mean, seriously, it's 10x what we would have imagined, at least 10x.

所以我們有很多事情要做。我們最優秀和最聰明的人實際上每天都在研究如何在更高的規模上做到這一點。因此，這將是一個激動人心的時刻，希望公司的投資者能夠看到我們正在做的事情並對此感到滿意。這是一個巨大的機會，比我們預期的要大得多。我的意思是，說真的，它是我們想像的 10 倍，至少 10 倍。

Yeah, it's very exciting. So thank you for taking all my questions.

是的，這非常令人興奮。謝謝你回答我所有的問題。

Thanks, Tom.

謝謝，湯姆。

Thanks, Tom.

謝謝，湯姆。

I would like to turn the call back over to Randy for closing comments.

我想將電話轉回蘭迪以徵求結束意見。

Okay, well, that's the end of our second quarter call. We appreciate you all taking time to listen to us. If you sense that we've never been quite as excited about what lies ahead and what has to get done, that's a true assessment. The opportunity is enormous. The amount of work that it will take and creativity and innovation on our part is equally enormous. But I wasn't kidding when I said we're up to the task So thanks for your support and have a good rest of the afternoon. Thank you.

好的，我們第二季的電話會議就到此結束。我們感謝大家抽出時間來聆聽我們的演講。如果您感覺到我們對未來和必須完成的事情從未如此興奮，那麼這是一個真正的評估。機會是巨大的。這需要付出龐大的工作量，而我們的創造力和創新也同樣龐大。但當我說我們能夠勝任這項任務時，我並不是在開玩笑。所以感謝您的支持，祝您下午好好休息。謝謝。

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

謝謝。今天的會議到此結束。此時您可以斷開線路，感謝您的參與。