Q4 2020 Park City Group Inc Earnings Call

Greetings and welcome to the Park City group so.

<unk> fourth quarter and full year Twentytwenty, earning earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Rob think with NK IR Mr. Fink you may.

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Thank you operator, good afternoon, everyone. Thank you for joining us today for park city groups fiscal fourth quarter and full year 2020 earnings conference call.

Hosting the call today are Randy Fields Park City group, CEO, and Chairman and John Merrell Park City groups CFO.

Before we begin I would like to remind everyone that this call could contain forward looking statements about park city group within the meaning of the private Securities Litigation Reform Act.

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Forward looking statements are statements that are not subject to the store.

Such forward looking statements are based on current beliefs and expectations.

Park City group management are subject to risks and uncertainties, which could cause.

<unk> actual results to differ from those forward looking statements that.

That's really what we discussed in the Companys filings with the Securities and Exchange Commission.

The information set forth yearend should be considered in light of such risks.

Park City group does not assume any obligation to update information contained in this conference call.

Shortly after the market close today the company issued a press release overview of the financial results that will be discussed on today's conference call.

Doctors can visit the Investor Relations section of the company's website at Park City Group Dotcom.

This press release.

With all that said I'd now like to turn the call over to John Thero, John The call is yours.

Thanks, Rob and good afternoon, everyone.

Today, We report financial results for the fourth fiscal quarter and full year fiscal 2020, ending on June Thirtyth.

Jumping right in the annual results reflect recurring revenue for our software business grew 13%.

Recurring revenue for the software business is 98%.

Marketplace revenue grew 62% we grew.

We grew tier two customers, 75% from 60 in 2019 205 hundred 2020.

Cash from operations was 4.2 million.

We have the strongest balance sheet in the company's history recognize continued profitability.

I am pleased with what we were able to achieve given the circumstances.

For the full year total top line revenue was down 5% due to our planned transition a onetime software revenue in favor of says recurring revenue.

This is part of our stated strategy. However, as you will see in the fourth quarter, we delivered top and bottom line growth, while simultaneously strengthening our balance sheet and generating increasing free cash flow despite significant uncertainty and challenges given the current environment.

Before we get into the numbers I believe it is important to reiterate that we have three legs of the stool or products sold in two different ways.

First we have a software as a service business, where sats, which includes our compliance and supply chain products historic.

Historically those products have been sold to software recurring subscription revenue and approximately four to 6 million in annual nonrecurring onetime license and service revenue.

As we said in 2019, we made the decision to focus our efforts on transitioning nonrecurring software revenue to recurring.

As of June 32020, 98% of our software business is now recurring revenue.

That in perspective in June 2019, and June 2018, the percentage of our software business that was recurring was 77% and 69% respectively transitioning was no easy feat.

Despite our efforts to eliminate all onetime software revenue as I previously communicated there will always be a small portion of customers, who will buy meaning license versus rent meaning subscription.

However, now the onetime software revenue in our business has been reduced to approximately $400000 in fiscal 2020.

The second revenue stream in our business is marketplace, which allows buyers and sellers to source hard to find things within our network of 20000 that retailers and their suppliers.

[noise], sometimes we act as the agent charging a nominal commission or fee and other times. We are the principal whereby we buy hold and sell goods for more for Mark up.

As you know marketplaces, largely transactional and inherently unpredictable.

The size and scope of transactions can vary from quarter to quarter based on seasonality buyer preferences pricing and the latest demand for those hard to find things.

Because we sit between buyer and seller or margin, whether as a markup of goods were commission is substantially less than what we get in the software side of the business.

As we have indicated before gross margin on incremental revenue of our software business base is approximately 80% to 85%. Conversely marketplace is on average roughly 5%.

Well, both the software and marketplace components of our business or difficult to separate from a business strategy and software suite. Our overall offering to our customers is a combination of solutions that enable customers to be compliant have more actionable visibility into their supply chain simultaneously, replacing vendors diversifying product offerings.

And sourcing hard to find items.

Why is this important you may ask for investors. This means that we now have a more predictable profitable software business, which fully covers our fixed cost and recurring revenue has grown at a double digit rate.

We also have a transactional business marketplace, which is a challenging to predict contributes lower margin, yeah, that's incremental revenue, while providing value to our customers, which facilitates cross selling.

I believe it is important to make this distinction with respect to our businesses.

An obvious question given the pandemic is how has cobot 19 affect the business and customers.

Cobot challenges have.

In the short term elongated sales cycle.

Decision, making has been delayed and some partners have needed extra time to pay.

In my view this is temporary and we will support our customers, where we can well be focused on stocking their shelves.

Nonetheless, the pandemic has reinforced the supply chain visibility and effective management is critical for our customers we believe.

We believe in the long term and this partnership will benefit PCG.

Furthermore, we expect to further penetrate and expand our existing customer base simply put farm the network and.

And we believe that the new normal post cobot may offer opportunities of incremental compliance and supply chain logistics to both new and existing customers.

In the interim marketplaces benefited from sales of hard to find goods, including personal protective equipment, which includes gloves masks thermometers and other items that have been difficult to reliably source during the pandemic.

This result in a marketplace growth for the fourth quarter.

Marketplace revenue was up 177% to $1.3 million in the June quarter just.

Despite co but our strategy has not changed we remain committed to what we have said before.

Focus on recurring software revenue replace one time reduce.

Reduce operating expenses non marketplace costs generate cash strengthen our balance sheet drive earnings and grow the network grow the network grow the network.

I have said before a solid balance sheet isn't a nice to have a customer's demand now more than ever before.

The pandemic changes nothing it only reinforces our focus.

Turning to the numbers.

Let me start with the fourth quarter.

Fiscal fourth quarter 2020 revenue was 5.8 million up 24% from 4.7 million in the same quarter last year.

For fourth quarter fiscal 2020 total operating expenses increased 20.8% from 4.4 million in Q4 2019 to 5.3 million in Q4 2020.

The principal increase in total operating expenses for the quarter of 900000. This largely result of marketplace.

Again marketplaces incremental revenue with a lower margin.

Sales and marketing expenses decreased from 1.5 million in Q4, 2019 to 1.3 million in Q4 2020.

This 15% decrease was the result of lower sales travel trade shows lower commissions and to a lesser extent the cost cutting measures. We started at the end of Q3.

Genie costs increased from 1.3 million in Q4, 2019 to 1.4 million in the same period 2020.

It's primarily result of increasing our bad debt reserve to be prudent for a customer default should it occur.

The increase in bad debt expenses, partially offset by a decrease in cost reductions associated with rent travel and professional services fees.

For the fourth quarter fiscal 2020, GAAP net income was 480000 or 8% of revenue versus 182000 or 4% of revenue.

GAAP net income to common shareholders was 333000 or two cents per diluted share compared to 36000 or zero cents per diluted share.

Turning to the full year results.

Fiscal 2020 annual revenues were 20 million compared to $21 million for the year ended June 32019, a decline of 5%.

This decrease in total annual revenue was largely a result of 3.7 million planned reduction of onetime software revenue that occurred in 2019 that did not repeat in 2020, partially offset by growth in recurring revenue and marketplace.

Total recurring revenue increased 13% year over year software recurring revenue is now 98% onetime nonrecurring revenue absent marketplace is now immaterial.

For the fiscal year, ending June 32020, total operating expense increased 8% from 17.2 million and 2018 to 18.6 million this year.

Let's take a look at the annual expense numbers in a little more detail.

Cost of services and product support for fiscal year 2020 cost of services and product support increased from 5.8 million to $7 million.

The 1.2 million or 20% increase in Cogs reflects 177% increase in marketplace revenue and its respective costs.

Sales and marketing.

For fiscal year, 2020 sales and marketing expenses decreased from 6 million to 5.8 million a 4% decrease.

The reduction is the result of lower revenue professional fees and lower commission related to lower revenue.

Gionee.

For the fiscal year, 2020 general and administrative expense was 4.9 million versus 4.7 million.

This 4% increase or $200000 is primarily due to an increase in bad debt reserve.

Well the company has not experienced or for season material customer default. We believe it is prudent given cobot that we increased the allowance for doubtful accounts.

This increase was offset with reductions in rent travel and professional fees.

Depreciation and amortization.

Depreciation and amortization expense was 600000 versus 840000 2019 versus 2020.

This 40% increase is attributable to the build out of the company's headquarters an expansion to the new device of data center that occurred in 2019.

A brief overview of Capex.

In 2019, the company expended 1.5 million to move its headquarters to Murray, Utah and complete its data center move to switch back in Las Vegas, Nevada.

In 2020, the company expanded 650000 for Capex.

60% reduction in Capex for fiscal 2020 is the result of completed projects.

As a technology company PCG estimates approximately 400 to 500000 per year in annual Capex spending for security licenses hardware updates and communing gear.

Turning now to net income.

The full year fiscal 2020, GAAP net income was 1.6 million or 8% of revenue versus 3.3 million or 16% of revenue a year ago.

GAAP net income to common shareholders was $1 million or five cents per diluted share compared to 3.3 million or 60% diluted share a year ago.

Turning now to cash flow and cash balances.

For fiscal year 2020, we generated cash from operations of $4.2 million compared to 4.6 million in the prior fiscal year and nine.

9% declined due to lower total revenue.

Total cash at the end of fiscal 2020 was 20.4 million compared to 18.6 million in the same period in 2019.

I want to point out of the 20.4 million cash balance is net of the approximately 2.7 million used to repurchase common stock under the stock buyback plan.

On a final note on cash and balance sheet strength.

Remember balance sheet strength is a necessity to our customers. They demanded therefore, we anticipate continuing to grow our cash balance to recurring revenue, a well controlled cost structure, maximizing profitability and generating value for customers and shareholders.

With respect to our stock buyback program in March during the height of Cove. It uncertainty we made the prudent decision to halt our buyback program.

We did not repurchase any shares during the fourth fiscal quarter.

Since the program began in 2019 the company has repurchased approximately 500000 shares of common stock for 2.64 million at an average price of 528 per share.

Those shares were canceled and are no longer in shares outstanding.

The company has 1.36 million remaining on its existing buyback program and given our foreseeable ability to generate cash and our current cash position. We may consider opportunistically resuming the program in fiscal 2021.

Thanks for your time, everyone today and at this point I'll pass the call over to Randy Randy.

Good afternoon, everyone about a year ago, we announced our strategic decision to focus our future growth in recurring SaaS revenue.

Better for the business as a whole makes the company's you'd understand and frankly easier to forecast yearly changes in revenue and profitability.

We believe then we believe now that this change will leave to much better valuations for us as shareholders. The change is focused on reducing the onetime revenue that was then inherent in our software business with both our compliance and our supply chain offerings, well, continuing and is important well continuing to go our subscription revenue.

And those two product groups.

So to reiterate.

So you give your way of thinking about is we have three different product groups sold in two different ways.

We have compliance products and supply chain products. It historically had a mix of subscription and onetime revenue that are now sold almost exclusively on a subscription basis or what we call our SaaS or software business.

Second we have our marketplace, which is derived from our customers asking us to help them solve a problem.

Which we are uniquely qualified locating hard to find suppliers and items.

By its very nature this leads to transactional revenue.

Two years ago, and I think this is an important reference point.

We had about 6 million of onetime revenue in our software business.

This year, we've reduced that to approximately $400000.

Difficult that very important accomplishment.

Same time, we should have been talking about this more the underlying recurring software business has been growing substantially with a compounded growth of 11.4% over the last three years and up to 13% last year, we're very very proud of that.

We knew this would likely flatten the reported topline revenue levels, which included all that onetime millions of dollars of software revenue as it's impossible, obviously to instantly backfill those millions and one time fees for subscription revenue.

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Even though we understood that we also shared that this transition would have many benefits first and foremost to make our business more predictable.

Second.

Overtime that would make us even more profitable remember our focus as a company historically has been to avoid raising cash to make sure that we look appealing to our customers and maintain our profitability.

And third it would make as much easier for investors to understand and model US again at that time. If you remember we thought it would take about two years, we assumed that several customers would continue to prefer to buy rather than rent our solutions.

We are about a year later well ahead of our plan and we've now effectively eliminated almost all of our onetime software revenue our onetime revenue last year was less than 2% as of June Thirtyth 2020, and that's down from 23% of the revenue the year before.

In the meantime, the recurring part of our SaaS business did grow substantially as we set the six.

This success is noteworthy and frankly may not have been noticed as a result, we're going into fiscal 2021 with a $17 million your base of recurring revenue that's important as our fixed cash costs, excluding the variable cost in marketplace or approximately 13 million annually.

So our recurring revenue now more than covers our fixed cash costs.

A wise and frankly nice place to be given the uncertainty in the world.

And as we continue to grow our recurring revenue and it grew 13% last year. Please remember each incremental dollar and recurring revenue into says side of our business beyond our current 17 billion base should contribute about 80 cents in profit and cash flow.

We're very proud of this progress and we certainly hope you are too.

We ended the year on a positive note theres no doubt the dependent continues to present challenging circumstances for park City group and our customers.

The uncertainty in the world's obvious uncertainty in fact, it's never a friend that said, we're very fortunate that we serve the grocery supply chain. As this segment of the retail industry has held up much better than most of the others and retail indeed.

The pandemic has exposed the weakness is the food supply chain and those are weaknesses that we've been working to address for many years as our customers shift their focus from the crisis and begin thinking about how to make their supply chain more resilient to meet future challenges or offerings will be we hope at the top of their minds.

In the interim marketplaces, helping them source many items that have been in short supply source. These items from suppliers. They can trust you can imagine trustworthy compliant that did suppliers have been really short supply.

Headlines prove this as you've seen several states and other municipalities and governments for example.

Sadly, having fallen victim to substandard suppliers are critical supplies.

As a result.

Good place contribute significant transactional revenue to our topline this last quarter.

This more than offset the $300000 decrease in onetime revenue excluding marketplace from our supply chain and compliance segment improved itself and this is interesting to be counter cyclical to the rest of the business.

The industry dynamics that serve as long term secular catalyst for us haven't changed in fact, if anything they've been reinforced dream.

During times of disruption in crisis food safety is even more critical and in fact, it's the same time hard are doing short comply.

Compliance remains critical but perhaps less urgent retail.

Retailers focused on keeping employees and customers save for temporarily putting compliance needs to decide.

Indeed, our sales cycle the same time, though.

Our new regulations that are being proposed that will increase the need for what we do and we are ready.

We continued to think decision delays will only last for a short while like customers deal with this immediacy that they have in the dressing pandemic induced challenges.

Recently, we gained an endorsement of a major food co-operative its encouraging its members to use. This obviously all of these kinds of things help us so how do things look for the year 2021.

At this point, even given the overall economic uncertainty, we all face we're optimistic about the year.

In many cases, but not all decisions are obviously being made slower.

Why are customers are locked into day to day battles to keep product on the shelves. We understand they simply don't have time for meetings calls and taking on new projects. However.

Overall, interestingly our pipeline of both tier one and tier two hubs is now the largest it's ever been.

We have numerous possible upsell opportunities, if you will which have already closed and been agreed to.

And will be deployed in revenue producing after the first of the year.

What we do is definitely needed and getting the attention and focus needed by our prospects as our challenge patients were sure wins here.

Even with delays the number of tier two hubs grew from 60 in fiscal 2019 205, so far this year ended.

In addition, our tier one pipeline has recently grown this tier ones are beginning to shift from pandemic related emergencies to addressing their longer term supply chain and this obviously will benefit us however, as the year unfolds. Several more of these were certainly hoping will fold into our win column.

In addition, we continue to believe that we can expand a repositrak offering internationally.

Pandemic. Unfortunately has delayed revenue from our new relationship in the UK, but we are effectively deployed and hopeful revenue will begin in early calendar 2021 simultaneously and again interestingly, we are getting interest from other countries, especially South America.

Another emerging opportunity for us involves a reseller channel several of our larger customers, including the distribution co-op, which provides private label products to retailers is recently endorsed Repositrak and is beginning to resell it to their members. So we're seeing similar reselling opportunities even in our out of stock offering it's early.

But we do view this as a potentially lucrative addition.

In terms of being a sales channel for us.

He called the disruption does also markedly increase the importance of a strong balance sheet on our part in fact, it's no longer an option to be financially strong when you're approaching new customers. We are aware of the few competitive companies that periodically we see in the marketplace finding themselves in financial difficulty large.

Large retailers cannot afford to do business with vendors are service providers.

Could be out of business, leaving them high and dry.

Visibility nor revenue in short term certainly remains challenging obviously for us and everyone else.

[noise], but quarter to quarter changes need to be viewed as a whole we're still a yearly company our quarters are not how we should be measured last year, we had some great.

At least some not so great quarters, but the recurring revenue for the year. Overall, Nevertheless was up 13% our recurring revenue in the software business. We believe will grow on an annualized rate in the low double digits again this year given the.

Given the cobot uncertainty our strategy frankly remains unchanged we will.

We will continue to grow recurring revenue.

Continue to carefully watch our expenses continued to grow profitability in cash not only for our customers, but obviously for our shareholders. So.

With that I'd like to open the call for questions operator.

Thank you. Our first question comes from Elliot helper from D.A. Davidson.

Great. Thank you you've done a great job in maximizing reference non recurring revenue and so congrats on that that said how should we think about the next 12 months when it comes to the factors that will drive or non recurring revenue.

And secondly in Amazon reported a 300% increase in the online grocery and the June quarter.

In the June quarter, I'm wondering what the implications are to park City group I just have one follow up after that thank you.

Okay. So why don't I take them in John then if you have something to add chime in here and first Amazon.

Truth is that Amazon is the enemy of all of our friends.

Everyone in the supermarket industry is worried about Amazon and their primary fear for online activity comes from Amazon. So the better in a way that Amazon does.

The more that people recognize that they cannot continue to do business the way.

The way they have tons huddling, and frankly stirring the pot in this case isn't in fact, good for us into.

In terms of and I think this is a very difficult question in terms.

In terms of how we expect the nonrecurring revenue to do in the next year or the truth is we don't know yet.

We think of the business and we would encourage you to think this way as now we have a fully recurring software SaaS business that.

It's going to continue to grow generates very significant underlying here GAAP profitability can you imagine that GAAP profitability.

And and additional business to serve this function toward customers.

[noise] that we call marketplace to a certain extent marketplaces derivative of the fact that.

Our compliance word causes our customers to have to rethink suppliers in their supply chain. If we help them uncover a supplier who's not doing the kind of job they ought to be from a compliance perspective. They are naturally going to turn to us for finding other vendors. So we've been doing this as a service.

We think it has very interesting upside, but the fact of the matter is and we're resourcing. It more heavily this year that means we're investing in it.

But we think it's got interesting upside we just don't think that we're in a place yet to forecast. It. So it's fair to say that if shortages continue.

For some period of time, then we would expect that hard to find things will be in demand by definition and that our marketplace revenue would be up sell.

It's a difficult question to answer I think if I were an investor I would really mostly be focused.

On the rest of the business.

Okay, Great and then lastly, just from an operating expense standpoint on how it's called mid 19 impacted your expenses John I think in the past you talked about how much money it costs to run your business here is after your higher or lower now because it's coming.

Yes, Randy now I mean, I had said this on the third quarter call I mean, we had addressed this.

When coking coal that took hold.

You know I have I've always said it takes 17 million to run this place not to get into we're counting but if you look at it from a cash standpoint forget depreciation amortization stock comp amortization on the lease stuff you know you're north of 14 million. So.

You know we had made you know as I said on the last call. Our goal is to reduce the operating spend if you look back call. At June 32021, we will have reduced our cash spend or about a $100000. A month I've always said 17, but that's been including a bunch of accounting stuff, but I mean cobot cope with it.

Not affecting us any more than what we've already done we're focused on a recurring revenue is that now exceeds our cost of staying in business absent marketplace, and then some and so cobot really isn't impacting that other than what we've done already to reduce these things so.

Contracts come offline or projects complete I'm comfortable saying that you can look back June 32021 look back 12 months. So you had about 1.2 million lower.

Okay, great. Thank you both.

Elliot, let me I will let me frame it differently from the Ceos perspective.

We've now created structural profitability in the business.

And I have to tell you as CEO and certainly as a shareholder it doesn't get much better than that in other words, our costs cash costs of being alive. If you will our military substantially lower than our forecastable recurring revenue and that revenue base will grow for the year not quarter to.

Corridor, but for the year will grow we think in low double digits. So conceptually.

In a way we think this is a really important milestone for us.

Helpful. Thank you.

Thank you. Our next question comes from another group from loop capital markets.

Hi, Good afternoon, guys. Appreciate you guys, taking my question than that congrats on a second straight solid quarter.

Thanks, Amanda yes, probably.

Environment.

Yeah look right, Randy John <unk> to that end.

And to your point about Rick Neely wrapping you made a couple of times.

When do you lap.

The yes.

Certain revenue headwind from that.

No revenue.

[laughter] you know all the recurring revenue you see a lot as overall rather.

As overall revenue growth, yeah sort of marketplace notwithstanding.

Got it that's a that's a terrific question.

By next quarter, meaning the.

Quarter ending in December I believe were pretty much pure pure and that will as we begin to expose that you'll see that our topline grows commensurate with our recurring revenue so.

So we are if we aren't there now we're damn close.

All right Awesome. That's that's helpful. And then you guys that Randy mentioned that for 20 <unk> for fiscal 20 wide.

Take a low teen recurring revenue growth how good.

You know if I go to dust off my data I believe that when you guys get started that.

You actually were thinking and correct me if I'm wrong, but you ask you if they can get maybe even a high single digit normalized for recurring not very 20 wide, but kind of the normalized.

Look look attractive what good wasn't a bad place to think about and so the question is is is that accurate in that recurring revenue is actually tracking higher structurally than you guys thought that it would initially and then I'm wondering over time, what's the potential.

For the kind of growth rate of the recurring revenue you guys.

I mean, it's incredible.

Okay, two more really good questions.

Yes, our belief in terms of top line freight revenue growth have increased.

Frankly, it's because our cross selling activities are going better than we had seen historically largely because in fact, we're focused on it.

So let me just give an example, one of our largest and best thought of compliance customers.

Has come to us and said I've heard.

I've heard about your out of stock work I want to do that now and that will be a significant have a significant impact in turn they referenced what we're doing to yet another one of our customers and told them that they should go from doing out of stock work into compliance. So we're seeing.

More cross selling opportunities number one.

Number two the tier two initiative, although slower than we would like I think.

I think all of us to become what I call true believers in terms of what that can do for the business.

So everything inside the business that looks like recurring revenue feels very good to us.

And as you certainly know about us we're operational in nature, what we care about primarily is that customer experience.

Remembering that if you grow at 15% in recurring revenue that means you're probably increasing that customer exposure or number of customers. If you will by about double that 30%.

Play once you're at a 30% growth rate of customers not revenue but of customers.

It puts an enormous burden on the business to meet.

Maintain that customer satisfaction and the customer success.

So we feel as if.

The kind of revenue that we want to see is low double digits.

And we can maintain that customer experience at that rate.

But you're right it is higher than we used to think.

Got it that's really helpful and how how should we think about.

Structural recurring.

Recurring revenue operating margin, Yeah, I know its software so.

Yeah, they tend to be a little bit higher, but what did or what are you are you there yet and if not.

Where the signposts forgetting there how should we think about what those there's a lot of those can be over time.

I think John said in his commentary and certainly all of us agree.

That on the recurring revenue side of the business, which will dominate the business going forward.

We would expect that incremental revenue produces about 80 cents of earnings and cash flow.

On every dollar of that revenue.

We think Weve matured, we think were there we certainly Johns team has certainly done an extraordinary job of cost control. So the truth of the matter is we are.

I'm feeling very good about our ability to to maintain that profitability, it's becoming a competitive advantage.

I think I mentioned that.

A couple of other people that we know that have services somehow like ours or that are in that call. It causes a competitive space are in serious financial trouble at.

And that's causing interest in what we do to increase so strong balance sheet and maintain our profitability one more time gap profitability not non-GAAP.

Doing that is we think the way forward, we're going to be conservative in our approach.

And protect that profitability and cash flow for the shareholders.

That's really helpful and one last one for me how should we think about the strategic priorities. The next.

Yes.

In terms of the overall priorities of the business are really the same more of the same we're growing out in terms of adding that.

Adding the additional tier one tier two hubs, that's historically been a major source of growth for us. We're on the same track and perhaps the only thing that's different is that we are more focused than we've historically been on expanding our footprint within any given customer cross selling.

Upselling that is going very very well our theory always was and I want to emphasize it.

That when you take great care of the customer when you are successful in terms of the technology.

And Youve service them well so they feel like they are in a relationship with you.

They are far more willing to buy other offerings and probably for the first time in the history of the business that is a major focus of ours and at this point I'm.

I'm.

Surprised at how well we're doing with that.

So that's that's really the focus we will add some activity outside the U.S., but that will.

But that will be incidental.

We haven't done a couple of other little things that we're doing as you know we did some government work.

[noise] were switching how we do that government work.

But still doing a little bit some pilots.

And Oh, we're going to experiment with an idea around how we can monetize some of the data that we have the benefit of our customers. So we're always a little experimental I don't want it sounds like a shiny new object because for US right now, it's blocking and tackling as I said, we have a pipeline that is largest in history that.

Business.

Great. Thanks, so much appreciate it.

Thanks Amanda.

Thanks, Tom.

There are no further questions at this time I would like to turn the floor back over to John Merrell and Randy fields for closing comments.

Well I think you know we feel very good about the year. Please remember each quarter will not be terrific. The year will be very very good. That's how we see it from today lots can happen out there for sure the uncertainty of the world is.

Ordinary I'm, not saying anything that everyone doesn't already know, but we feel very good about where we're positioned and weve got her.

Got ourselves set in a way that will produce.

Will produce a very profitable years, so we feel good about where we are.

And then.

That no I agree with that 100%.

I mean, I I did for me its recurring revenue its cash it's a growth maximizing the profitability and keeping an eye on expenses.

Yes.

[noise].

That completes today's call. Thank you for your participation you may disconnect your lines at this time.

[noise].