Q3 2020 Gty Technology Holdings Inc Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome to the TTM.

Why.

Technology Holdings incorporated Q3 2020 earnings call.

At this time all participants are in a listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone keypad.

If you require any further assistance. Please press star zero in queue I would now like to hand, the conference over to your speaker today.

John Kerry. Please go ahead.

Thank you and good morning, everyone.

Dunker, DTY CFO and I would like to welcome you to our third quarter earnings Conference call for 20 point.

With me on today's call Teekay parent DTY CEO.

We will be presenting to fly on todays call and encourage you to view the presentation found on our website at Www Dot DTY technology dotcom.

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Please note that our earnings release and quarterly report on form 10-Q are available on the DTY website at Www Dot Btwob technology Dot com both.

Both contain additional information about our financial results.

Any forward looking statements we made in the earnings release or any that we may make during this call are based upon information that we believe to be true as of today.

Things up and change however, actual results may differ materially from those projected or anticipated.

Please refer to our cautionary statements in the earnings release under the heading forward looking statements.

You should also refer to our SEC filings, including our most recent form 10-K, and our subsequent SEC filings for a list of risk factors applicable the GT wide, including risks associated with COVID-19.

As you will hear in our comments today, the pandemic is impacting our business today and for an undetermined time into the future.

During the call we may refer to non-GAAP financial measure if we believe they are useful to investors or if we believe it will help investors better understand our results or business trends.

You can see a reconciliation of our non-GAAP financial measures to their nearest comparable GAAP financial measure and exhibit two of the earnings release.

With that I will turn the call over to TJ.

Thank you John.

Good morning, and thank you all for joining us.

Before we dig into this quarter's great results.

I want to let you all know that is GT wise focus to modernize governments and make them more efficient.

Q I was formed to bring best of breed cloud technologies and state and local governments with a twofold focus.

First do improve and modernize the businesses experienced with their government front offices and second to bring modeling solutions to government employees. So they are able to work more efficiently.

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Currently we offer five product lines.

Our front office solutions from city based on open standards are used by citizens such as you need to figure out what permits we need and.

In the process of those permits online.

These firms can be as simple as a tree cutting Berman says complex is helping someone started a new business. The walk you through the many permits that will be required.

City based solves the offering complex process of how you make payments or your government by ensuring the sales experience is very simple and quick.

The offer many ways make payments from C. at home to paying out a kiosk.

Our back office solutions are used by cities and towns to run their operations.

For example.

Our Graham mentioned solution by Easter. This is used to how governments manage and distribute grants.

Governments have likely been using E services products to help manage and distribute cobot funding.

Our budgeting and planning businesses, which is made up of Sherpa in Glasgow are very busy very busy right now as we work with governments, who are updating budgets as they deal with the effects of the economic changes.

Our sourcing platform by bonfire helps governments with the challenges of dealing with multiple vendors complex RFP processes and compliance.

All of our business units have been growing this year.

Turning to recent highlights it's been a busy quarter and we're pleased with the results in Q3, we achieved double digit revenue growth.

Remained disciplined cost management.

77, new customers.

Maintaining high customer satisfaction scores and experienced continued strength in growth and got that market.

Our GAAP revenues, which increased 44% from Q3 2000 1940.

40% year to date.

We became cash flow positive for the quarter, we experienced continued levels of strong demand for GTT wise product offerings.

And finally, we have concluded our review of potential strategic alternatives that we announced at the beginning of this year.

Given the continuing uncertainties arising from the pandemic and the positive developments in the company's financial performance over the last past few quarters.

We believe it is the best interest of the GT lysaght quarters to focus on executing the company's Standalone business plan.

Although the process has concluded the company will continue to evaluate all opportunities to drive growth and enhance shareholder value.

To update you on the cobot market environment as mentioned earlier DTY is experiencing excellent growth and opportunity with our strategy and offerings. However.

However, cobot is a factor in our market in some positive and negative ways.

Our customers state local governments are facing headwinds such as budget cuts and ensure resources are deployed the cobot response.

At the same time cobot related changes are creating tailwinds.

Cobot has challenged the public sector by highlighting that the efficiencies that legacy system space, where they are not cloud enable.

This is a positive for our business because GT why offers cloud based solutions for governments.

As you recall in the Lockdowns hit we took immediate action and announced the Cobot Emergency response program, how governments legacy technology gets swiftly to the classic operate remotely.

We offer free use of our products for a period of time as a means to be helpful. While also furthering awareness of our products.

The program has now come to an end, having generated nearly $1 million of additional client opportunities across more than 85, new potential clients.

We are currently forecasting a program to generate more than half a million dollars of EMR by year end.

We're pleased to have helped hundreds of public sector organizations with this program inclusive of non profit.

We welcome those that have joined us as new customers.

To provide insight to our cobot means to our business planning and visibility.

Oh it is both both a push and a pull to our business that remains dynamic unpredictable with with a positive long term outlook.

We've had some prospects delayed because their budgets have been cut or they need to redirect resources the cobot related challenges.

While in other cases, we've had deals close faster than normal because the deadlines associated with grant funding.

Just remote operations.

Overall, it is clear the market appreciates the value of moving to the cloud more now than ever and we expect this trend to continue.

Turning to the next slide our CFO, John Curran will now review the financials.

Thank you Jay.

This was a great quarter and we remain on track for more than 20% growth in 2020 as outlined at the onset of COVID-19.

Q3 is seasonally our strongest quarter invoicing and collections.

Okay.

Consistent with last quarter, we wanted to provide a little more color on the change in non DAP revenue.

As you can see in this chart our recurring revenue grew by 6% on a quarter over quarter basis and grew by 32% on a year over year basis.

Our service revenue can vary from quarter to quarter due to the timing of large projects and.

And we expect professional services to decline as a percentage of revenue as our base of recurring revenue continues to grow.

Combine this with our strong collections and you can see why we had a good cash quarter.

From a cash perspective, we started the quarter with $6 million and ended with 6.2 million in cash.

From an outflow perspective operating for analysts roughly 1.7 million this quarter down from $2.4 million in Q2.

We also paid out $700000 in severance $600000 of Capex and $400000 in interest in the quarter.

Color from our business units because while the company scoreboard is interesting and important the game itself is on the playing field.

I'm impressed by how quickly our business you know C E O as in their teens pivoted in March to ensure our staff we're safe our customers continue to have the level of service they expect.

To accommodate the lack of traveling events our business. He has made very quick decisions on how to manage their teams during covid.

As a result, you see some great success and or online efforts with customer town halls, and webinars as well as a simple effort of picking up the phone and calling prospects.

Are offering spanned from state level right down to small towns in North America and encouraged by the success, you're seeing the focus to expand as a mid market.

At the state Mercedes level, we continue to have the success against large ERP companies.

Governments are embracing the cloud and looking to move out of monolithic systems and towards best of breed solutions.

This is why tty was formed.

Every business unit G T Y as strongly engaged in seen success.

Bonfire is 60% revenue growth to square Fort Versed Q3, 2019, you M. P. S score was over 73, just amazing customer satisfaction.

Phoenix, one slot went live with our Sherpa budgeting solution on time and under budget.

The state of North Dakota selected our Sherpa budging solution.

<unk> Reilly from Needham and company your line is open.

Hey, guys congrats on the strong quarter.

Fed up with the macro question.

How should we think about the ongoing impact of Tobin 19, you've already given some color, but maybe expand on that a bit more you expect budgets to be dependent.

Right now, we're assuming that it just kind of look a lot like the the back half of 2020 from a market and economic perspective.

So given that assumption.

We feel that we can be cash flow positive next year.

Just from <unk>.

<unk> trend perspective, we do see seasonal flow to our invoicing just as we experienced in Q3 stronger.

Levels of invoice and collections are flow is weaker first have stronger second half, but when you some of the year next year, we expect to be positive.

Okay, Great and then maybe moving on.

Sales towards productivity.

Taking some contacts from here over the last couple of quarters and had to sit through a virtual selling environment.

It appeared the mix of business in the quarter with having towards.

New new logo as a customer.

Tumors versus many of your on premise competitors are you hearing that does it have the key point here.

Hey, Josh this TJ, yes for sure I mean, our team has.

Already had many years of digital and patients remotely.

All we just shifting to the remotely from the office didn't remotely from home, so very little change to our existing customers experienced.

And it is definitely one of the advantages of Detroit has the ability to onboard customers quickly.

Our solutions, we've got that kind of downhill well oiled machine.

Okay, great. Thanks, guys congrats on the pickup there.

Hi, Josh.

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