Park City Group Reports Record EPS of $0.08 for the Second Fiscal Quarter of 2019

Record Net Income of $1.7 million and Fully Diluted EPS of $0.08

Converged Business Model Drives Enhanced Execution and Operating
Leverage

Company Achieves Goal of Adding Two Additional MarketPlace Buyers
Before Fiscal Year End

SALT LAKE CITY–(BUSINESS WIRE)–Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak,
Inc., which operates a B2B ecommerce, compliance, and supply chain
platform that partners with retailers, wholesalers, and their suppliers,
to accelerate sales, control risk, and improve supply chain
efficiencies, announced financial results for the second fiscal quarter
ended December 31, 2018.

Second Fiscal Quarter Financial and Recent Business Highlights:

  • Operating margin exceeded 30% driving record net income and upside
    to EPS expectations.
  • Compliance connections metric reached 75,000 for over 320,000
    connections across all applications.
  • MarketPlace interest points to additional users and additional use
    cases before fiscal year-end.
  • Supply Chain trends remain positive as HUBs look to drive
    capabilities deeper into supplier base.
  • Customer focus drove strong connection growth, low churn, and
    increased cross selling.

“Our converged business is driving benefits in terms of improved
execution and enhanced profitability, as evidenced by the record net
income in the quarter,” said Randall K. Fields, Chairman and Chief
Executive Officer of Park City Group. “We continue to scale our network
of connections, and we are still at the early stages for increasing the
scope of our activities on this network. Our single technology platform
and investments in automation are allowing us to shed the overhead of
our legacy model. As we focus the Success Team on serving our customers
through a single, cohesive application platform, we expect revenue
growth to accelerate and earnings growth to continue to outpace revenue
growth.”

“Our activities in the quarter were focused on execution to ensure our
customer’s success,” added Mr. Fields. “We now have over 75,000
compliance connections, as the team focused on onboarding suppliers for
two large Tier 1 compliance customers which we won in the first quarter.
One of these HUBs is one of the largest wholesalers in the country, and
the other was a large retailer where our mandate grew since the initial
engagement last quarter. These two engagements, and a robust pipeline of
Tier 1 and Tier 2 prospects, give us confidence fiscal 2019 will be
another strong year for adding compliance connections.”

“Interest in MarketPlace continues to grow,” said Mr. Fields. “As we
projected, we have added two more buyers to MarketPlace, achieving this
goal ahead of our own target of the end of our fiscal year. One of these
will begin using the platform this quarter for the same use case as our
initial buyer. The second launched in December for a completely new use
case and has become a valuable customer reference. MarketPlace is early
stage and subject to quarterly variances, due to seasonality and
customer initiatives, but we are highly encouraged and expect to
demonstrate the progress we have made.”

“Industry dynamics continue to drive higher interest in our supply chain
capabilities as our HUBs are looking to drive our applications deeper
into their supplier bases,” said Mr. Fields. “This is happening
organically through an acceleration in the addition of new suppliers to
existing HUBs and through high-level discussion for HUB-wide mandates
and large supplier-driven mandates like we saw at the end of the prior
fiscal year. We believe there is an eight-figure opportunity just from
engaging every supplier we already enable at each of our HUBs they
already service.”

Financial Results Summary:

Second Fiscal Quarter Results: Total revenue declined 3% to $5.6 million
for the three months ended December 31, 2018, as compared to $5.7
million during the same period a year ago primarily due to lower
revenues from the sale of licenses and a year-over-year decline in
MarketPlace revenue. Total operating expenses were $3.9 million, an 11%
decrease from $4.4 million a year ago, as the Company is leveraging
investments made in increasing productivity. GAAP net income was $1.7
million, or 30% of revenue, versus $1.4, or 24% of revenue, a year ago,
and GAAP net income to common shareholders was $1.5 million, or $0.08
per diluted share, compared to $1.2 million, or $0.06 per diluted share,
a year ago.

Fiscal 2019 To Date Results: Total revenue increased 10% to $11.5
million for the six months ended December 31, 2018, as compared to $10.4
million during the same period a year ago primarily due to an increase
in subscription revenues for the Company’s compliance and supply chain
services. Total operating expenses were $8.8 million, a 2% increase from
$8.6 million a year ago, as the Company is leveraging investments made
in increasing productivity. GAAP net income was $2.7 million, or 23% of
revenue, versus $1.7, or 16% of revenue, a year ago, and GAAP net income
to common shareholders was $2.4 million, or $0.12 per diluted share,
compared to $1.4 million, or $0.07 per diluted share, a year ago.

Conference Call:

The Company will host a conference call at 4:30 P.M. ET today, February
7, 2019 to discuss the Company’s results. Investors and interested
parties may participate in the call by dialing 877-407-9716 or
201-493-6779 (international) and referring Conference ID: 13687250. The
conference call is also being webcast and is available via the investor
relations section of the Company’s website, www.parkcitygroup.com.
A replay of the conference call will be available from 7:30 ET today
until 11:59 p.m. ET on March 7, 201-. The Replay can be accessed by
calling 844-512-2921 (toll-free) or 412-317-6671 (international). Please
enter pin number 13687250 to access the replay.

About Park City Group:

Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak,
Inc., a compliance, supply chain, and e-commerce platform that partners
with retailers, wholesalers, and their suppliers, to accelerate sales,
control risk, and improve supply chain efficiencies. More information is
available at www.parkcitygroup.com
and www.repositrak.com.

Specific disclosure relating to Park City Group, including management’s
analysis of results from operations and financial condition, are
contained in the Company’s annual report on Form 10-Q for the fiscal
quarter ended December 31, 2018 and other reports filed with the
Securities and Exchange Commission. Investors are encouraged to read and
consider such disclosure and analysis contained in the Company’s Form
10-K and other reports, including the risk factors contained in the Form
10-K.

Non-GAAP Financial Measures

While this press release does not include non-GAAP financial measures,
the financial presentation below contains certain financial measures
defined as “non-GAAP financial measures” by the Securities and Exchange
Commission, including non-GAAP EBITDA and non-GAAP earnings per share.
These measures may be different from non-GAAP financial measures used by
other companies. The presentation of this financial information, which
is not prepared under any comprehensive set of accounting rules or
principles, is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with generally accepted accounting principles.
Reconciliations of these non-GAAP financial measures to the nearest
comparable GAAP measures will be provided upon the completion of the
Company’s annual audit.

Non-GAAP EBITDA excludes items such as impairment charges, allowance for
doubtful accounts, non-cash stock-based compensation and other one-time
cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash
stock-based compensation, amortization of acquired intangible assets and
other one-time cash and non-cash charges. The Company believes the
non-GAAP measures provide useful information to both management and
investors by excluding certain expenses, gains and losses or net
purchases of property and equipment, as the case may be, which may not
be indicative of its core operation results and business outlook.
Because Park City Group has historically reported certain non-GAAP
results to investors, the Company believes that the inclusion of
non-GAAP measures in the financial presentation below allows investors
to compare the Company’s financial results with the Company’s historical
financial results reported using non-GAAP financial measures, as well as
with the financial results reported by others.

Forward-Looking Statement

Any statements contained in this document that are not historical facts
are forward-looking statements as defined in the U.S. Private Securities
Litigation Reform Act of 1995. Words such as “anticipate,” “believe,”
“estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,”
“predict,” “if”, “should” and “will” and similar expressions as they
relate to Park City Group, Inc. (“Park City Group”) are intended to
identify such forward-looking statements. Park City Group may from time
to time update these publicly announced projections, but it is not
obligated to do so. Any projections of future results of operations
should not be construed in any manner as a guarantee that such results
will in fact occur. These projections are subject to change and could
differ materially from final reported results. For a discussion of such
risks and uncertainties, see “Risk Factors” in Park City’s annual report
on Form 10-K, its quarterly report on Form 10-Q, and its other reports
filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of the dates on which they are made.

Park City Group, Inc.
INCOME STATEMENT
                           
3 Months Ended 6 Months Ended
FY ENDS June 12/31/18 12/31/17 % Chg. 12/31/18 12/31/17 % Chg.
 
Total Revenues $ 5,565,237 $ 5,724,706 (3 %) $ 11,507,231 $ 10,436,871 10 %
 
Operating Expenses
Cost of Services and Product Support (1,270,659 ) (1,426,351 ) (11 %) (2,999,185 ) (2,844,364 ) 5 %
Sales and Marketing (1,139,855 ) (1,621,149 ) (30 %) (3,047,879 ) (3,207,089 ) (5 %)
General and Administrative (1,326,735 ) (1,140,085 ) 16 % (2,470,046 ) (2,275,855 ) 9 %
Depreciation and Amortization   (144,030 )   (163,825 ) (12 %)   (289,405 )   (322,628 ) (10 %)
Total Operating Expenses (3,881,279 ) (4,351,410 ) (11 %) (8,806,515 ) (8,649,936 ) 2 %
 
Operating Income $ 1,683,958 $ 1,373,296 23 % $ 2,700,716 $ 1,786,935 51 %
 
Interest Income 54,773 89,897
Interest (Expense)   (5,623 )   (7,696 ) (27 %)   (16,096 )   (29,887 ) (46 %)
Income Before Taxes 1,733,108 1,365,600 27 % 2,774,517 1,757,048 58 %
 
Provision for Taxes   (47,500 )   (15,116 ) NM   (122,500 )   (75,714 ) 62 %
 
Net Income $ 1,685,608 $ 1,350,484 25 % $ 2,652,017 $ 1,681,334 58 %
 
Dividends on Preferred Stock   (146,611 )   (162,966 ) (10 %)   (293,222 )   (280,126 ) 5 %
 
Net Income to Common Shareholders $ 1,538,997   $ 1,187,518   30 % $ 2,358,795   $ 1,401,208   68 %
 
GAAP EPS, Basic $ 0.08 $ 0.06 27 % $ 0.12 $ 0.07 65 %
GAAP EPS, Diluted $ 0.08   $ 0.06   29 % $ 0.12   $ 0.07   67 %
 
Weighted Average Shares, Basic 19,822,000 19,487,000 19,804,000 19,455,000
Weighted Average Shares, Diluted 20,375,000 20,338,000 20,474,000 20,340,000
 
                       
Park City Group, Inc.
RECONCILIATION OF NON-GAAP ITEMS
   
3 Months Ended 6 Months Ended
FY ENDS June 12/31/18 12/31/17 % Chg. 12/31/18 12/31/17 % Chg.
 
Net Income $ 1,685,608 $ 1,350,484 25 % $ 2,652,017 $ 1,681,334 58 %
 
Adjustments:
Depreciation and Amortization 144,030 163,825 (12 %) 289,405 322,628 (10 %)
Interest Expense (Income) (49,150 ) 7,696 NM (73,801 ) 29,887 NM
Provision for Taxes 47,500 15,116 214 % 122,500 75,714 62 %
Other (Incl. Bad Debt Exp.) 100,000 145,050 (31 %) 200,000 195,050 3 %
Stock Compensation Expense   227,585     189,785   20 %   323,273     388,099   (17 %)
 
Adjusted EBITDA $ 2,155,573 $ 1,871,956 15 % $ 3,513,394 $ 2,692,712 30 %
 
 
Net Income $ 1,685,608 $ 1,350,484 25 % $ 2,652,017 $ 1,681,334 58 %
 
Adjustments:
Stock Compensation Expense 227,585 189,785 20 % 323,273 388,099 (17 %)
Acquisition Related Amortization   32,850     32,850     65,700     65,700  
 
Adjusted non-GAAP Net Income 1,946,043 1,573,119 24 % 3,040,990 2,135,133 42 %
 
Preferred Dividends   (146,611 )   (162,966 ) (10 %)   (293,222 )   (280,126 ) 5 %
 
Adjusted non-GAAP Net Income
to Common Shareholders $ 1,799,432 $ 1,410,153 28 % $ 2,747,768 $ 1,855,007 48 %
 
Adjusted Non-GAAP EPS $ 0.09 $ 0.07 27 % $ 0.13 $ 0.09 47 %
 
Weighted Average Shares, Diluted 20,375,000 20,338,000 20,474,000 20,340,000
 
               
Park City Group, Inc.
CONSOLIDATED BALANCE SHEET
   
Period Ended
FY ENDS June 12/31/18 6/30/18
 
Assets
 
Current Assets:
Cash $ 16,682,282 $ 14,892,439
Receivables, Net Allowances 4,588,663 4,222,348
Contract Asset (Current Portion of Unbilled) 2,727,921 3,502,287
Prepaid Expenses and Other Current Assets   1,028,417     1,116,387  
Total Current Assets $ 25,027,283 $ 23,733,461
 
Property and Equipment, Net $ 1,725,221 $ 1,896,348
 
Other Assets:

Deposits and Other Assets

18,691 18,691
Contract Asset (Long-Term Portion of Unbilled) 3,175,125 1,194,574
Investments 477,884 477,884
Customer Relationships 854,100 919,800
Goodwill 20,883,886 20,883,886
Capitalized Software Costs, Net   119,895     168,926  
Total Other Assets $ 25,529,581 $ 23,663,761
 
Total Assets $ 52,282,085   $ 49,293,570  
 
 
Liabilities
 
Current Liabilities:
Accounts Payable $ 838,151 $ 1,490,434
Accrued Liabilities 1,336,526 745,694
Contract Liability (Deferred Revenue) 2,671,296 2,335,286
Lines of Credit 4,660,000 3,230,000
Current Portion of Notes Payable   36,768     188,478  
Total Current Liabilities $ 9,542,741 $ 7,989,892
 
Long-Term Liabilities:
Notes Payable, Less Current Portion 258,209 1,592,077
Other Long-Term Liabilities       7,275  
Total Long-Term Liabilities $ 258,209 $ 1,599,352
 
Total Liabilities $ 9,800,950 $ 9,589,244
 
Shareholder Equity
 
Series B Preferred $ 6,254 $ 6,254
Series B-1 Preferred 2,124 2,124
Common Stock 198,395 197,738
Additional Paid-In Capital 77,129,244 76,711,887
Accumulated Deficit   (34,854,882 )   (37,213,677 )
 
Total Shareholder Equity $ 42,481,135 $ 39,704,326
 
Total Liabilities and Shareholder Equity $ 52,282,085   $ 49,293,570  
 
             
Park City Group, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
   
6 Months Ended
FY ENDS June 12/31/18 12/31/17
 
Cash Flows From Operating Activities:
Net Income $ 2,652,017 $ 1,681,334
 
Adj. to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and Amortization 289,405 322,628
Bad Debt Expense 200,000 195,050
Stock Compensation Expense 323,273 388,099
Decrease (Increase) in Accounts Receivables 208,051 (2,046,797 )
Decrease (Increase) in LT Receivables, Prepaid Expenses and Other
Assets
(1,892,581 ) 621,015
Increase (Decrease) in Accounts Payable (652,283 ) 73,931
Increase (Decrease) in Accrued Liabilities 366,966 74,383
Increase (Decrease) in Deferred Revenue   335,734     58,970  
Net Cash From (Used In) Operating Activities $ 1,830,582 $ 1,368,613
 
Cash Flows From Investing Activities:
Capitalization of Software Costs (111,241 )
Purchase of Property and Equipment   (3,547 )   (177,643 )
Net Cash From (Used In) Investing Activities $ (3,547 ) $ (288,884 )
 
Cash Flows From Financing Activities:
Net Increase in Line of Credit 1,430,000
Proceeds from Employee Stock Plans 119,790
Proceeds from Exercise of Options and Warrants 164,997
Proceeds from Issuance of Notes Payable 56,078
Dividends Paid (146,611 ) (325,931 )
Payments on Notes Payable and Capital Leases   (1,485,578 )   (165,164 )
Net Cash From (Used In) Financing Activities $ (37,192 ) $ (315,227 )
 
Net Increase (Decrease) in Cash $ 1,789,843 $ 764,502
 
Cash at Beginning of Period   14,892,439     14,054,006  
 
Cash at End of Period $ 16,682,282   $ 14,818,508  

Contacts

Investor Relations:
Todd Mitchell, CFO
435-645-2216
investor-relations@parkcitygroup.com
Or
Hayden
IR
Rob Fink / Brett Maas
646-415-8972 / 646-536-7331
PCYG@haydenir.com

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