GTY Technology (GTYH) 7 Nov 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the GTY Technology Holdings, Inc. Q3 2020 Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, John Curran, please go ahead.

Thank you, and good morning, everyone. I'm John Curran, GTY's CFO, and I'd like to welcome you to our third quarter earnings conference call for 2020. call Parass, today's CEO. on me is GTY's TJ With

www.gtytechnology.com. during today's to encourage financial statements found Things Statements. or this We XX-Q our that are at results release website that earnings however, on those presenting our the www.gtytechnology.com. any quarterly anticipated. refer on release on note under from call upon made and be we earnings may make website projected available heading and presentation materially are earnings will information the Please call be about Form release the the the to forward-looking Both slides we in contain and results. true we based report information as that often actual Any to cautionary view believe you our differ our GTY on in Forward-Looking or Please of may today. at to change, additional statements

our including filings, our risk with a You should SEC applicable our SEC for including COVID-XX. Form associated also GTY, most to XX-k list factors filings of subsequent and risks to refer recent

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

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

comparable their call earnings can financial our release. see to the I'll financial in nearest that, turn TJ. over GAAP You Exhibit a of of With reconciliation measure measures to two the non-GAAP

joining morning, us. you, all you Good for John. Thank and thank

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

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

growing All business year. have of this units our been

continued added we customer busy In with been experienced satisfaction revenue in results. recent customers, a in growth It's achieved disciplined new the high quarter, market. strength XX cost management, scores to we're the remain Turning govtech in and and highlights. QX, growth, pleased double-digit maintained

of announced concluded of year. for We of that became strategic revenues increased and the we this beginning our Our potential flow finally, at year-to-date. XX% offerings. And alternatives for levels positive continued XXXX cash strong GAAP demand we experienced QX quarter. GTY's from have XX% review We the product

the past we company's developments stand-alone positive Given the the to pandemic performance believe over executing is the best on interest business from it in the stockholders company's arising two focus of the the GTY quarters, and plan. uncertainties financial continuing in the

value. has COVID growth excellent environment, GTY Although you concluded, shareholder drive process on offerings. and update all growth strategy will the the earlier, To market with company opportunities as continue mentioned to the our and is enhance and evaluate experiencing opportunity to

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

Our where solutions that for COVID-related deficiencies for the positive are is budget COVID highlighting same customers, by ensuring such GTY enabled. changes offers are sector COVID business public face governments. deployed facing cloud-based as are cloud the not they and are legacy to the a challenged state creating and time, At headwinds local governments, systems response. our This because cuts tailwinds. resources has

to recall, to a help when to our across COVID time can remotely. program cloud of has a additional come as furthering be helpful hit, swiftly our of gets than took an new action response means offer million immediate so you one the generated a governments. having client potential free period we they emergency operate lockdowns end, program of of the announced products As nearly now while technology We XX to use products. The for opportunities Legacy more and also awareness clients.

a generate We than more forecasting program $X.X million are year-end. by to of currently ARR

of means is positive our cut have To helped are those or COVID delayed budgets COVID to and had a that planning to both and prospects as their needed dynamic, We've business We us a business provide joined they visibility, our some to that challenges. sector to long-term unpredictable, resources customers. to outlook. been because organizations a insight push nonprofits, with to what redirect remains COVID-related new pull of with and pleased we have this public have inclusive hundreds program, welcome

with market the trend closed because expect Overall, than cloud or we operations. than of While grant funding for other adjust the ever, moving now value faster remote normal to deals to of continue. had and to more is we've this the deadlines it clear cases, in associated appreciates

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

of outlined and XX% and alternatives. quarter, a the at seasonally our remain our onset free on and important is we achievement strongest quarter the of Other than positive collections. QX cash more of for COVID-XX. as This evaluation the great flow the for quarter in TJ. for highlights strategic invoicing conclusion of Thank XXXX, track was you, include growth

our the results quarter. to for on Moving financial

between the Our compared We'll GAAP more of $XX.X in QX for GAAP a QX $X.X with $X.X of XX%. revenue two detailed in in revenue QX On in non-GAAP million 'XX, results subsequent included explanation million release. increase slide. was is XX% reconciliation provide an 'XX on our 'XX of the our Exhibit of million press change of with A and non-GAAP a compared increased revenue to 'XX. QX million in $XX.X a basis, of

We to remain operating the of operating our with non-GAAP expenses. saw Turning prior QX total expenses compared our essentially period. 'XX flat

to compared $X.X 'XX with Our XXXX $X.X 'XX. and QX loss $X.X of of of quarter loss in GAAP million third QX narrowed million a million operating in

QX compared operating quarter, improvement our million Our Consistent decreased little and with gross provide 'XX, in in of $X.X million the driven loss with XX% on we more primarily wanted by to last non-GAAP revenue. profit. $X.X in a non-GAAP third quarter an quarter-over-quarter growth revenue change color

quarter-over-quarter XX% recurring chart, on see X% a basis. As revenue a on this by in and by basis grew our grew you year-over-year can

recurring we -- from to vary and can revenue service expect as the projects, professional a of Our revenue base license that sales decline grow. due we of quarter-to-quarter kiosks a and as of timing we of services expect large percentage also Other software a time. of revenue percentage to our decline includes revenue to that to revenue continues also sales over expect as

services expect by XXXX. for We growing our and expect the roughly year by with grow XX% to than see and X% more recurring revenue will revenue other compared

continue will balance to our sheet, at dollar like as subscription would higher discuss. I there to revenue be service and of Taking a business. percentage and other are grow three our terms to and recurring Our we in revenue look continue areas base

in The in in collections. in receivable, this which have quarter, first We some the improve is seen days but driven early strong QX change of the timing experienced delays QX. decreased $XXX,XXX the we by in our collection pandemic, collections by

accruals area increase AP to of in timing. is The the an quarter second due $XXX,XXX and in

perspective, in cash. million we million associated the cash million of the Combining operating good From is why a and The quarter $X.X can we this contract have $X.X quarter. strong our an in $X.X with trend represents perspective, had the started excess with with we cash liabilities our this amount outflow amount we earned from third quarter, subscription a million in see collections, increase $X.X From the quarter. invoiced you in This our billing. QX. and with of ended million area roughly an increase revenue in down was of $X

change our paid were million. working and out quarter. From seasonably high capex also the the interest $XXX,XXX $XXX,XXX in quarter and in severance, our inflow collections of strong capital perspective, drivers an primary in behind billing in We $X.X $XXX,XXX in

split carry in view we experienced current deferrals have Canadian efforts, to between we received we U.S. payroll into churn cash evenly our of our to low the activities, also stimulus us believe on cost our ability We products, and sales rates date $XXX,XXX about subsidies. reduction have tax a and implement Based funding wage XXXX. sufficient to

in still outlook. remain business material see revenue than don't in improvements customers our to XXXX. our Turning environment and reductions the ability about near We concerned We the and in the for to budgets expect term. by more ARR XX% in grow

expect very than Combined both level same the invoice our of in inflows operations renewal QX. don't is Our QX strong from lower volume in in we collections QX QX. QX, and cash with

cash result, in the as We year. improving on QX. our remain we a flow focused to As expect profitability we and negative be finish growth

economic an XXXX. expect we that similar XXXX, to will to be Looking climate

flow to we to cash expect could positive I turn to XXXX. continue We would back things from in that, be like operations TJ. With

John. you, Thank

while our made safe, on take color business your unit business in they ensure the how to important, our the is our of service to I'm field. March the from itself COVID. travel we customers is pivoted staff on business have provide CEOs expect. manage to continue to are accommodate scoreboard the very events, and impressed our our decisions by some how their quick questions, game their company's of wanted units lack the I units quickly during playing and To level teams you teams interesting because Before

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

companies. cities toward and NPS to our North Their At unit in against and in success down revenue XXXX. the XX% Phoenix just the strongly GTY business satisfaction. GTY score Every GTY state growth level, Our towns the on and over has America, Governments out move to success at with and XX, continue ERP the cloud budgeting the logos budgeting is right solutions. under why are of small and and was systems this offerings to North span overall, XX this state we our monolithic customer live best-of-breed have by embracing is Bonfire encouraged Sherpa expand focus I'm engaged to This went solution, of team seeing from budgeting formed. time are solution, was versus the quarter. large the quarter amazing in to large The level success. mid-market. we new Dakota selected added seeing Sherpa state budget. QX looking

of summary, achieved staff deploying Fort grant selection management, quarter, clear strong CityBase experienced adjustment and great revenues Recently, a Austin have front-runner high satisfaction by are for demonstrated last top with CityBase's In we efforts were a market very you. continues challenge. new and achieved to the levels Counter's quarter. for GTY remain up demand Operator, GTY state demand everyone Gartner's double-digit that guide for strategic I in we Worth line XX% joined to for review alternatives. cloud. vendor. to recognized saw in the a COVID, want quarter. process. concluded payments and and open local eCivis big the their to customer line RFP of software as added take continued thank the and for management minute a It's it management continued at the their been questions. the selected the quarter for our for strength flow the solutions positive cash growth, We XX eCivis discovery Thank was We this and for products, innovative our strong. GAAP expanding high risen permit in transition logos the had XX% solution. list year-to-date. please a government's government. were was customers quarter of solutions to cost Open

comes question first from Needham Your Reilly & Instructions] [Operator from Joshua Company.

open. Your line is

on Hey, strong the guys. quarter. Congrats

you on about maybe expect Let's budgets vaccine more. start be you expand widely are And a already question. being How from with it of we dependent color, but customers off vaccine to until a in COVID-XX? impact available? macro on another given should round more some XXXX hearing or the bit think to a Do You've are broadly of waiting spend available? that a stimulus then widely is ongoing

we've been unfolded, and pretty right the we lot we're way especially following now looking intensely various at publications. Josh, did so it the like and a the looking a quarters. is this of is could at be business two XXXX the not We're last lot reading

stimulus the market So year. this see may bookings in were two saw a stimulus. with XXXX, come this downfall building that for year In with revenues little the of covered line largely last I expectations government the [increase] we that government the saw in stimulus, to you'll We're and in the out stimulus. a that the of future what bit go while of expecting in XXXX. some instance, by we're business be around quarters into And what XXXX, not saw think

you about in give you prepared And then given confidence some operating trends uncertain you for macro? in target great. Okay, moving more on that cash structure positive what being FY'XX. the in mentioned your Maybe year flow next or provide business in on, color the remarks can

Josh, its John. Yes.

XXXX. So, from that economic like Right to TJ we're the half XXXX we're perspective. a and going assuming said, of market as we're out of kind look now, back it's assuming

we next flow given we can year. be So, that feel assumption, cash that positive

collections. trend just experienced a of see Just levels from and QX, to our perspective, we invoicing a stronger do seasonal invoicing, flow as in we

weaker to second half. expect is when stronger first But next positive. up year half, year, be the sum flow we you Our

couple new Okay, appears of cost sales of bit shift going had Obviously, virtual toward should quarter customers. It mix quarters on to has moving mix last of taken think selling to heavy And a the about little It upsell was we actions great. we've here and new maybe to new toward then been force versus the logos. environment. or seems shift in How productivity. over the a some logos forward? here business logos the the more

Yes.

So, our kind only consistent. But QX. We in the pretty environment. our has reasonably experience of been two quarters mix experience and actually this has had with of consistent pandemic in quarter mix been

In upsell terms have We new generation, flow new activity, so expectation. will ARR we do have of majority logos. positive come decent That's net from of do churn. the our a

to be yes. quarter-on-quarter. growing predominantly our we're So But base new new our of business anticipate renewal And bookings to from is and going mix new going is we be customers. continuing, that

seems competitors? Okay, a going exceed just one your a for premise me. in point hearing are your current solutions versus here? nice to on then here great. when It customers a ability advantage you're remote Is of selling implementations the cloud-based complete that on And competitive fully basis macro. the Are many more you as question with in point key

All from then we being remotely Yes, TJ. remotely. implementations from the years This to many in for already is remotely yes. sure. did office home. is our from Josh, mean, had Hey team of has I shift

change onboard one advantages has customers' the to kind that And little very We've definitely ability quickly a solutions. machine. with is GTY of experience. customers our of well-oiled that our existing got the is to So down it to

thanks success great, Congrats here. Okay guys. the on

[Operator presenters back are questions. the remarks. I'll turn closing over no to further for Instructions] call the There

stay and talk safe, you to want us again to next guys quarter. thank and just everybody joining today I for Okay. we'll

concludes gentlemen for you this and Ladies today’s call. Thank participating. conference

disconnect. now may You