Release Date: May 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ReposiTrak Inc (NYSE:TRAK) reported a 16% increase in revenue for the third fiscal quarter, reaching $5.9 million.

• The company achieved a 27% growth in net income, translating $828,000 in incremental revenue into $415,000 in incremental net income.

• ReposiTrak Inc (NYSE:TRAK) has a strong cash position with over $28 million on the balance sheet as of March 31, 2025.

• The company is experiencing growth across all lines of business, including traceability, compliance, and supply chain.

• Cross-selling initiatives are gaining momentum, contributing to overall growth and leveraging a single technology platform for operational efficiencies.

Negative Points

• Operating expenses increased by 7%, reflecting ongoing investments in marketing, technology, and customer onboarding.

• The percentage of recurring to total revenue slightly declined from 99% to 98% due to one-time setup fees associated with customer onboarding.

• Cost of revenue increased by 10% due to investments in developer resources for expanding their proprietary platform.

• Sales and marketing expenses rose by 4% as the company continues to invest in raising awareness of its solutions.

• The company acknowledges that some quarters may have higher or lower revenue growth, indicating potential volatility in quarterly performance.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with VNWTF.

Q: Can you talk about the impact of tariffs on your business? A: Randy Fields, Chairman and CEO: The primary effect of tariffs is the uncertainty they introduce, which can slow down decision-making in the food industry. However, we haven't seen a significant impact on our business, which continues to accelerate. Tariffs are a hurdle, but not a major one compared to challenges like the pandemic.

Q: How should we think about changes in your cost structure and how your next dollar revenue converts into profitability? A: John Merrill, CFO: We will continue investing in automation and awareness, especially with the FDA's delay. Our goal is to flatten expenses over time as onboarding and advertising costs decrease. Currently, our revenue contribution margin is about 50%, but we aim to increase it to 70-80% as expenses stabilize.

Q: Can you talk about the growth of your other initiatives beyond traceability? A: Randy Fields, Chairman and CEO: Our single technology platform provides significant operating leverage, allowing us to cross-sell effectively. We have been modestly successful in the past, but we are now seeing growth across all business areas. This includes developing new products based on customer needs, which will drive future revenue.