EPS of $0.08 increased by 11.4% from previous year
Gross margin of 81.7%
Net income of 1.55M
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Park City Group Inc (PCYG) QQ2 2024 Financial Analysis: Strong profitability, robust cash generation, and a scalable SaaS supply-chain platform
Executive Summary
Park City Group Inc (PCYG) delivered a solid QQ2 2024 results period ending December 31, 2024, underpinned by strong gross margins, meaningful profitability, and substantial cash flow generation. Revenue of $5.49 million rose 7.12% year over year and 0.91% quarter over quarter, while gross profit of $4.49 million produced a gross margin of 81.74%. Operating income was $1.35 million with an operating margin of 24.62%, and net income came in at $1.56 million, or a net margin of 28.25%, supported by modest financing costs and depreciation. EBITDA was $2.04 million (EBITDA margin ~37.07%), highlighting the company’s ability to convert revenue into cash flow at a high step-change efficiency relative to the expense base. All-in, Park City Group generated $0.93 million of cash from operations and approximately $0.92 million in free cash flow for the quarter, with free cash flow per share around $0.19. The balance sheet remains exceptionally healthy, with cash and cash equivalents of about $23.25 million and a net cash position (net debt negative) of roughly $(22.66) million, against total debt of $0.59 million. Total assets stood at $50.33 million and stockholders’ equity at $45.74 million, supported by a meaningful goodwill balance of $20.88 million and intangible assets of $0.74 million. The company’s revenue growth appears to be driven by its ReposiTrak and related supply-chain solutions, a high-margin software stack with significant recurring revenue potential. Management commentary on the call (if available) would be critical to confirm execution assumptions around market penetration, expansion of compliance and food-safety solutions, and cross-sell opportunities; however, the transcript data provided here is not available. Investors should weigh the durable cash-generation profile and balance-sheet strength against a relatively small revenue base and premium valuation in this niche software segment.
Key Performance Indicators
Revenue
5.49M
QoQ: 0.91% | YoY:7.12%
Gross Profit
4.49M
81.74% margin
QoQ: -2.04% | YoY:16.50%
Operating Income
1.35M
QoQ: -8.65% | YoY:8.96%
Net Income
1.55M
QoQ: -6.85% | YoY:6.89%
EPS
0.08
QoQ: -6.32% | YoY:11.42%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $5.49 million, up 7.12% YoY and 0.91% QoQ.
- Revenue: $5.49 million, up 7.12% YoY and 0.91% QoQ.
- Gross Profit: $4.49 million; Gross Margin: 81.74% (vs. 81.74% prior period; YoY margin trend supported by product mix).
- Operating Income: $1.35 million; Operating Margin: 24.62% (operating leverage evident as scale increases).
- Net Income: $1.56 million; Net Margin: 28.25% (profitability remains robust with low interest and tax drag).
- EBITDA: $2.04 million; EBITDA Margin: 37.07% (high cash-generation proxy for software assets).
- EPS (diluted): $0.08; Weighted Avg shares (diluted): ~19.14 million.
- Cash Flow: Net cash provided by operating activities $0.93 million; Free cash flow $0.92 million; FCF per share ~$0.19.
- Balance Sheet: Cash and cash equivalents $23.25 million; Total assets $50.33 million; Total liabilities $4.59 million; Total stockholders’ equity $45.74 million; Goodwill $20.88 million; Intangible assets $0.74 million.
- Liquidity: Current ratio 5.18; Quick ratio 5.18; Cash ratio 4.48; DSO ~65.9 days; CCC ~39.7 days.
- Leverage: Long-term debt $0.32 million; Total debt $0.59 million; Net debt position around $(22.66) million (net cash heavy).
- Valuation: Price to sales ~32.6x; Enterprise value multiple ~89.7x; Price to earnings ~28.8x; Price to free cash flow ~51.7x (indicative of a premium, reflecting strong profitability and cash generation).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
5.49M
7.12%
0.91%
Gross Profit
4.49M
16.50%
-2.04%
Operating Income
1.35M
8.96%
-8.65%
Net Income
1.55M
6.89%
-6.85%
EPS
0.08
11.42%
-6.32%
Key Financial Ratios
currentRatio
5.18
grossProfitMargin
81.7%
operatingProfitMargin
24.6%
netProfitMargin
28.2%
returnOnAssets
2.83%
returnOnEquity
3.24%
debtEquityRatio
0.02
operatingCashFlowPerShare
$0.19
freeCashFlowPerShare
$0.19
dividendPayoutRatio
26.4%
priceToBookRatio
3.73
priceEarningsRatio
28.83
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript data is not provided in the material. As a result, this section cannot quote management verbatim or summarize management commentary from the QQ2 2024 call. If a transcript becomes available, we will extract themes on strategy, execution milestones, market conditions, and guidance, and incorporate direct quotes with context.
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Forward Guidance
No explicit forward guidance was published in the provided QQ2 2024 materials. Given the quarter’s strong profitability and cash generation, the operating trajectory appears favorable for Park City Group’s software-as-a-service and supply-chain solutions stack. In the absence of formal guidance, investors should monitor: (i) revenue growth trajectory from ReposiTrak MarketPlace and related compliance, safety, and supply-chain modules; (ii) customer concentration risks and renewal rates; (iii) operating leverage as the company scales with lower marginal costs; (iv) working capital dynamics and AR collection cycles; (v) any potential M&A activity or product expansions that could broaden the addressable market. Management commentary (when available) should address longer-term ARR growth, multi-year profitability targets, and capital allocation plans (e.g., share repurchases, acquisitions, or capex for platform enhancements).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PCYG Focus
81.74%
24.60%
3.24%
28.83%
RDVT
69.40%
16.10%
3.00%
33.20%
IDBA
39.50%
-15.52%
-2.67%
-48.48%
MIXT
61.50%
14.40%
2.08%
18.98%
ISDR
76.80%
4.35%
0.02%
1,099.90%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Positive near-term fundamentals driven by profitability and cash generation, with a favorable balance sheet enabling strategic options. The QQ2 2024 results demonstrate efficient scale in a niche but attractive market segment (supply-chain software for grocery/retail), and the business appears capable of expanding ARR through cross-sell and platform expansion. However, the stock trades at a premium to many peers (P/S ~32.6x; EV/Revenue ~89.7x), so the investment thesis hinges on sustained mid-teens topline growth, continued high gross margins, and meaningful expansion of recurring revenue. Investors should monitor retention, expansion in contract values, and any explicit guidance or roadmap updates from management to validate the long-term revenue trajectory. A potential investment-ready stance would be to wait for a modest pullback or for clearer visibility on ARR growth and long-term targets, while using the current cash generation as a cushion for downside protection.
Key Investment Factors
Growth Potential
Growth potential centers on expanding adoption of ReposiTrak MarketPlace, compliance and food safety solutions, and extended SCM modules (ScoreTracker, Vendor Managed Inventory, Store Level Ordering). The high gross margin and cash generation support scalable growth as the company deepens penetration within grocery chains, wholesalers, and distributors. Look for indicators of expanding total contract value, increase in recurring revenue, and cross-sell efficiency across Store Level and Enterprise SCM platforms.
Profitability Risk
Key risks include: (a) reliance on a niche set of grocery/retail partners which could limit upside if customer churn rises or if macro conditions constrain IT spend; (b) premium valuation relative to peers, reflected in P/S and EV/Revenue multiples, which can compress if growth decelerates; (c) limited disclosure on R&D investments and product roadmap—execution risk if investments do not translate into expanded ARR; (d) potential regulatory changes impacting food safety/compliance spending; (e) customer concentration risk and potential dependency on a small number of large retailers or distributors.
Financial Position
The balance sheet is exceptionally strong with a net cash position (~$22.66 million), low debt ($0.59 million total debt), and ample liquidity (current ratio ~5.18). Intangible assets and goodwill (~$21.62 million) dominate non-cash assets, suggesting inorganic growth history. Cash flow generation is robust (CFO $0.93 million; FCF $0.92 million for the quarter) with free cash flow per share around $0.19, supporting potential capital returns or strategic investments. The company’s profitability metrics (OPM ~24.6%, NPM ~28.3%, EBITDA margin ~37%) indicate healthy operating efficiency for a software-enabled business with a modest cost structure and limited debt load.
SWOT Analysis
Strengths
High gross margins (81.74%), indicating a premium software product with scalable economics
Strong cash generation and a net cash position, enabling flexibility in capital allocation
Low debt burden and solid liquidity (CFO/FCF generation supports resilience)
Niche, high-value compliance and supply chain solutions within grocery/retail ecosystems
Positive YoY revenue growth and robust profitability in QQ2 2024
Weaknesses
Small revenue base relative to larger SaaS peers, which can lead to higher sensitivity to customer churn
Limited disclosure on R&D investments and product roadmap in the provided materials
Goodwill/intangible asset concentration could imply impairment risk if growth decelerates
Premium valuation metrics may pressurize stock performance if growth trajectory slows
Opportunities
Expansion of ReposiTrak MarketPlace and compliance/food safety modules across larger retailer networks
Cross-selling opportunities across ScoreTracker, Vendor Managed Inventory, and Enterprise SCM offerings
Potential expansion into additional verticals beyond grocery/retail (e.g., standalone supply chain analytics, other high-touch industries)
Healthy balance sheet supports potential acquisitions or strategic partnerships to accelerate growth
Threats
Competition from larger, more diversified SaaS players with greater sales/marketing budgets
Macro headwinds affecting IT spend in retail/food & beverage sectors
Regulatory changes in food safety/compliance could alter investment appetite or feature requirements
Valuation risk given elevated P/S and EV/Revenue multiples relative to peers if growth decelerates
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