ReposiTrak, Inc.

Greetings and welcome to Reposit Track Fiscal First Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Stanliss with FNK IR. Mr. Stanliss, you may begin, sir.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us today for Repositrak's Fiscal First Quarter 2026 earnings call. Hosting the call today are Randy Fields, Repositrak's Chairman and CEO, and John Merrill, Repositrak's CFO. Before we begin, I would 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. CompositeTrack's remarks are subject to risks and uncertainties of 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. CompositeTrack does not assume any obligation to update information contained in this conference call. 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 RepositTrack.com to access this press release. With all that said, I would now like to turn the call over to John Merrill. John, the call is yours.

Thanks, Jeff, and good afternoon, everyone. Fiscal 2026 started as a continuation of the success of fiscal 2025. We continue to execute on our business plan. Once again, the proof is in the numbers. Our strategy remains the same, grow annual recurring revenue between 10 to 20% and grow profitability even faster, generating more cash to bolster our balance sheet and support our continuation of returning capital to shareholders. Simultaneously, without exception, we take superb care of the customer because when they are successful, they buy more from us. Let's get to the numbers. First fiscal quarter revenue increased 10% from $5.4 million to $6 million. Total operating expenses for the quarter increased 3%. This is largely due to investment in RTN, including wizard onboarding tools, increased cybersecurity costs, database license fees, and other direct costs associated with development. SG&A costs were up 6% due to higher payroll costs associated with higher revenues, increased insurance premiums, and increases in employee benefit costs. We grew total revenue at approximately twice the rate of SG&A expenses and at three times the rate of total operating expense growth. Simultaneously, we delivered $356,000 of revenue per employee on an annualized basis. twice the rate of the 2024 Statista software industry average of $175,000 per employee. This is due to our lean nature, efficient operations, and our ongoing use and expansion of automation. It also reflects our methodical spending decisions based on return on investment and not hope. At the same time, we will never trade growth at the expense of delivering less than exquisite customer care. Income from operations was up 28% to $1.9 million versus $1.5 million. Gap in income was $1.8 million, up 13% versus $1.7 million last year. The conversion of income from operations to gap in income was muted during the quarter due to higher income taxes. As previously communicated, the company is at the end of its benefit period from utilized and expiring net operating losses for both federal and state income tax. Historically, the company had net operating losses to offset income for income tax purposes, resulting in an effective tax rate of approximately 4% to 6%. Many of those NOLs have been used up or expired given our 30-plus quarters in a row of continued gap profitability. While continuous and growing profitability is not a bad problem to have, our NOLs to offset income for tax purposes have largely run out. We are exploring tax credits and other initiatives to mitigate our effective tax rate, However, I believe it is fair to say our tax rate will be higher than 6% going forward. Gap in income to common shareholders increased 13% to $1.8 million from $1.6 million. Earnings per share for the quarter was 10 cents per share basic and 9 cents per diluted. This is based on 18.2 million basic shares outstanding and 19.1 million shares diluted. This results in a year-over-year EPS growth of 13% when factoring in the accrual for higher income taxes. Cash from operations was $1.5 million, down from $1.9 million in the year-ago quarter due to the conversion of deferred revenue to booked revenue. Total cash increased to $28.8 million from $28.6 million at June 30. And the company continues to have zero bank debt. I remain confident that our continued financial performance will double the size of the company over the next several years. Historically, our business model results reflect double-digit revenue growth, 80-plus percent gross margins, and roughly 30 percent net margins, and strong cash generation. In accordance with our capital allocation strategy, the Board continues to target returning 50 percent of annual free cash flow to shareholders. Since inception, the result has been three increases in the cash dividend. At the same time, we continue to redeem the preferred stock and repurchase common shares without any bank debt. We are experiencing growth in all lines of business. While traditional sales of one service to solve one problem continues to grow, our cross-selling initiatives are delivering accelerated momentum. Again, our strategy has not changed. First and foremost, take exceptional care of the customer and execute perfectly. Next, grow recurring revenue, increase profitability, use cash to buy back common stock, redeem the preferred, and do it with no bank debt. At the same time, return capital to shareholders through an increasing cash dividend. Finally, we have and will continue to build cash on the balance sheet, close to $29 million as of September 30, 2025. Turning to our capital allocation plan. Since inception of the capital allocation plan, the company has paid off over $6 million of bank debt. As of September 30, 2025, the company has zero bank debt and zero need for additional capital. We maintain that confidence given our financial health, which is precisely why we terminated our $12 million line of credit some quarters ago. Since inception, the company has redeemed approximately 572,000 shares of preferred stock at the stated redemption price of $10.70 per share for a total of $6.1 million. There remains 266,000 preferred shares to redeem for a total of $2.8 million. At the current rate of redemption of $750,000 a quarter, I maintain our goal to redeem all of the remaining preferred shares issued in outstanding on or before December of 2026. During the first quarter of fiscal 2026, the company also repurchased 8,715 common shares for a total of $150,000 or an average of $17.21 per share. The company has approximately $7.8 million remaining of the $21 million total common share buyback authorization as approved by the Board of Directors as of September 30, 2025. The company holds no treasury stock. Common shares are repurchased and simultaneously canceled. Since inception, we have paid out over $5.7 million in cash dividends to shareholders and raised the common stock dividend now three times by 10% each time since December of 2023. From time to time, the board will evaluate our capital allocation strategy, making appropriate adjustments based on the approach most beneficial to all shareholders at that time. Our goal is to continue to return 50% of annual cash from operations to shareholders and putting the other half in the bank. In a moment, Randy will talk about our strategy to modernize the software code we utilize. This initiative aligns with our existing capital allocation strategy of taking half the cash from operations and put it in the bank, with the other half allocated to redeem the preferred, buy back common shares, pay off debt, increase the dividend, and consider M&A opportunities. In other words, if M&A opportunities we come across don't make financial sense, or don't fit with our long-term development strategy, then let's build it, not buy it. We are exceptional at building things. The logical question is, what will it cost, and is it a distraction? First, we do not anticipate meaningful increase in our cash expenses related to this initiative. Instead, we will reallocate annual capital expenditures, which may result in increases in depreciation and amortization down the road, and modest short-term adjustments to our research and development costs but we believe the overall impact is negligible. Meaning, as we have done in the past, we expect to reallocate existing developer resource to transition the core of our development environment to take advantage of newer capabilities, including expanding our use of artificial intelligence, or AI, and with little distraction. I will let Randy provide more color on the technical components. However, in my financial view, our strong cash generation, solid balance sheet, and the continued growth from all lines of business means that we are well-positioned to undertake this task. The time is right, and we believe this is an appropriate use of our capital and consistent with our capital allocation strategy. Once complete, we believe the advanced modernization of our platform will position Repositrak for the next phase of profitable growth. That's all I have today. Thanks, everyone, for your time. At this point, I'll pass the call over to Randy. Randy?