ReposiTrak, Inc. Q2 FY2026 earnings call

Long-term strategy: convert revenue streams to SaaS recurring, pay down debt, control expenses, increase margin, generate cash and return to shareholders, invest in business. Second quarter revenue up 7%, operating expenses down 2%, SG&A up 5% due to higher revenues, etc. Income from operations up 34%, GAAP net income up 9%. Year-to-date revenue up 8%, operating expenses flat, income from operations up 31%, GAAP net income up 9%. Repurchased ~80,000 common shares, redeemed 70,000 preferred shares, declared quarterly dividend of $0.02 per share, third 10% increase since 2022.

Second fiscal quarter revenue increased 7% from $5.5 million to $5.9 million. Fiscal 2026 year-to-date total revenue increased 8% from $10.9 million to $11.8 million. Since 2020, converted over $7 million in onetime revenue to recurring SaaS, recurring revenue from 62% to over 98%. Paid off over $6 million in bank debt, reduced annual operating expenses from ~$19 million to $16 million, net margin grew from 8% to north of 30%. Net cash increased at 16% CAGR from $13.7 million in 2020 to almost $29 million in 2025. This quarter, invested in products, filed 2 patents, and invested in systems and core software stack.

Invest in business including products, patents, and systems. Anticipate acceleration of onboarding and interest in Traceability solution due to FDA deadline approaching. Incremental revenue disproportionately falling to bottom line, contribution margin continues to increase.

Supplier data initial error rate between 50%-70% in Traceability, competitors' Traceability approaches have issues, AI may have short-term headwind for business, food inflation may impact customers' cost considerations.

Q: Thomas Forte asks about Traceability revenue percentage, AI's impact on Traceability data accuracy, impact of MAHA, Traceability on buy ingredients basis, food inflation's impact, investment spending in P&L, patent capitalization, strategic M&A.

A: John Merrill and Randall Fields answer respective questions including Traceability revenue is between 8%-10%, AI helps detect and correct Traceability data errors, MAHA increases awareness of food safety issue, capable of Traceability on buy ingredients basis, inflation indirectly impacts business, spending is targeted resource spending, de minimis patent capitalization costs, focused on current work but open to strategic M&A if right opportunity