GTY Technology Holdings Announces Solid Third Quarter Financial Results

Rhea-AI Summary

GTY Technology Holdings reported a strong third quarter 2021, with total revenue reaching $16.3 million, marking a 29% increase year-over-year. Annual recurring revenue was $48.5 million, up 25% year-over-year. Despite achieving higher gross profit of $10.3 million with a 64% gross margin, the company faced an operating loss of $(8.5) million and a net loss of $(9.5) million, widening from $(7.2) million in Q3 2020. Looking ahead, GTY expects fourth quarter non-GAAP revenue between $16.3 million and $16.8 million, representing 25% growth.

Positive

• Total revenue for Q3 2021: $16.3 million, up 29% YoY.
• Annual recurring revenue grew to $48.5 million, a 25% increase YoY.
• Gross profit rose to $10.3 million with a gross margin of 64%.

Negative

• Operating loss increased to $(8.5) million, compared to $(7.3) million in Q3 2020.
• Net loss widened to $(9.5) million, or $(0.17) per share, from $(7.2) million in Q3 2020.

Annual recurring revenue of $48.5 million, up 25% year-over-year

Total third quarter revenue of $16.3 million, up 29% year-over-year

BOSTON--(BUSINESS WIRE)-- GTY Technology Holdings Inc. (Nasdaq: GTYH) (“GTY”), a leading vertical SaaS/Cloud solution provider for the public sector, today announced financial results for the third quarter ended September 30, 2021.

“GTY reported another great quarter, highlighted by the large CityBase kiosk install with DTE Energy, a midwestern electric utility which drove our strong performance this quarter with one-time revenue associated with kiosks and will generate significant recurring revenue going forward. We again exceeded expectations across all key operating metrics with continued strength in ARR at 25% growth year-over-year,” said TJ Parass, CEO of GTY. “As we look ahead, we are very encouraged by the strength of our portfolio and the tailwinds supporting the need for public sector organizations to modernize and transform their operations. We believe these strengths as well as our continued investments in sales and marketing position us to maintain our momentum for the balance of fiscal 2021 and beyond.”

Third Quarter 2021 Financial Highlights

• Revenue: Total GAAP revenue for the third quarter of 2021 was $16.3 million, up 29% compared to $12.6 million in the third quarter of 2020. Total non-GAAP revenue for the third quarter of 2021 was $16.4 million, up 29% compared to $12.7 million in the third quarter of 2020.

• Gross Profit: Gross profit for the third quarter of 2021 was $10.3 million, compared to $8.0 million for the third quarter of 2020. Gross margin for the third quarter of 2021 was 64%, compared to 63% for the third quarter of 2020. Non-GAAP gross profit for the third quarter of 2021 was $10.9 million, compared to $8.3 million for the third quarter of 2020. Non-GAAP gross margin was 67% for the third quarter of 2021, compared to 65% for the third quarter of 2020.

• Operating (Loss): Operating loss for the third quarter of 2021 was $(8.5) million, compared to an operating loss of $(7.3) million in the third quarter of 2020. Non-GAAP operating loss for the third quarter of 2021 was $(0.1) million, compared to an operating loss of $(1.4) million in the third quarter of 2020.

• Net (Loss): Net loss for the third quarter of 2021 was $(9.5) million, or $(0.17) per share, based on 57.5 million weighted average shares outstanding. During the third quarter of 2020, net loss was $(7.2) million, or $(0.13) per share, based on 53.8 million weighted average shares outstanding.

Definitions and reconciliations of all non-GAAP financial measures and additional information regarding operating measures are included below in the section titled “Use of Non-GAAP Financial Measures” and in the accompanying tables. All comparisons in this press release are year over year unless otherwise provided.

Third Quarter 2021 Highlights and Key Metrics

• CityBase, GTY’s payment solutions subsidiary, deployed a large kiosk solution with DTE Energy well ahead of schedule.

• Bonfire, GTY’s eProcurement subsidiary, launched Bonfire Open Access Community Projects. This freely accessible tool will provide public procurement teams with access to an extensive database of public projects from across North America to streamline the RFx creation process.

• Added 74 new customers in the quarter ended September 30, 2021.

• The number of customers was 1,868 as of September 30, 2021, an increase of 11% from 1,685 as of September 30, 2020.

Additional information regarding our new customers, total customers and Annual Recurring Revenue and how each are calculated are included below.

Financial Outlook

As of November 4, 2021, GTY is providing guidance for its fourth quarter and full year 2021 as follows:

• Fourth Quarter 2021 Guidance: Total Non-GAAP revenue is expected to be in the range of $16.3 million to $16.8 million or approximately 25% year-over-year growth. Non-GAAP loss from operations is expected to be in the range of $(2.0) to $(2.5) million.

• Full Year 2021 Guidance: Total Non-GAAP revenue is expected to be in the range of $60.5 million to $61.0 million or approximately 24% year- over-year growth. Non-GAAP loss from operations is expected to be in the range of $(4.7) to $(5.2) million.

Conference Call and Webcast
GTY will hold its quarterly earnings call on November 4, 2021 at 4:30 p.m. ET. Conference call details for participation on the call are listed below. A transcript will also be posted to the Investor Relations section of our website at www.gtytechnology.com.

Investors and participants can register for the call in advance by registering here. After registering, instructions will be shared on how to join the call. The call will also be available via live webcast here. The archived webcast will be available shortly after the call on the company website, www.gtytechnology.com.

About GTY Technology Holdings Inc.
GTY Technology Holdings Inc. (NASDAQ: GTYH) (“GTY”) brings leading public sector technology companies together to achieve a new standard in stakeholder engagement and resource management. Through its six business units, GTY offers an intuitive cloud-based suite of solutions for state and local governments, education institutions, and healthcare organizations spanning functions in procurement, payments, grant management, budgeting, and permitting: Bonfire provides strategic sourcing and procurement software to enable confident and compliant spending decisions; CityBase provides government payment solutions to connect constituents with utilities and government agencies; eCivis offers a grant management system to maximize grant revenues and track performance; Open Counter provides user-friendly software to guide applicants through complex permitting and licensing procedures; Questica offers budget preparation and management software to deliver on financial and non-financial strategic objectives; Sherpa provides public-sector budgeting software and consulting services.

Forward-Looking Statements
This release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The company’s actual results may differ from its expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside of the company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the impact of the COVID-19 pandemic, or other public health crises, on our operations, our customers and the economy; (2) the risk that the ongoing integration of the businesses acquired in our business combination disrupts current plans and operations; (3) the ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably and retain its key employees; (4) our failure to generate sufficient cash flow from our business to make payments on our debt; (5) changes in applicable laws or regulations; (6) the possibility that the company may be adversely affected by other economic, business or competitive factors; and (7) other risks and uncertainties included in our Annual Report on Form 10-K for the year ended December 31, 2020 and our subsequent filings with the Securities and Exchange Commission. We caution you that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements, which speak only as of the date made. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by securities law.

Use of Non-GAAP Financial Measures
To supplement its condensed consolidated financial statements, which are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, GTY has provided in this release certain financial measures that have not been prepared in accordance with GAAP defined as “non-GAAP financial measures,” which include (i) non-GAAP revenues, (ii) non-GAAP gross profit and non-GAAP gross margin, (iii) and non-GAAP loss from operations.

GTY’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating GTY’s ongoing operational performance and trends. However, it is important to note that particular items GTY excludes from, or includes in, its non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financial measures used by other companies in the same industry. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP financial measures has been provided in the tables included as part of this press release.

Non-GAAP Revenues. Non-GAAP revenues are defined as GAAP revenues adjusted for the impact of purchase accounting resulting from GTY’s business combination which reduced its acquired contract liabilities to fair value. The company believes that presenting non-GAAP revenues is useful to investors as it eliminates the impact of the purchase accounting adjustments to revenues to allow for a direct comparison between periods.

Non-GAAP Gross Profit and Non-GAAP Gross Margin. Non-GAAP gross profit is defined as GAAP gross profit adjusted for the impact of purchase accounting resulting GTY’s business combination and share-based compensation. Non-GAAP gross margin is defined as non-GAAP gross profit divided by non-GAAP revenues. The company believes that presenting non-GAAP gross profit and margin is useful to investors as it eliminates the impact of the purchase accounting adjustments to allow for a direct comparison between periods.

Non-GAAP Loss From Operations. Non-GAAP loss from operations is defined as GAAP loss from operations adjusted for the impact of purchase accounting to revenues resulting from GTY’s business combination, the amortization of acquired intangible assets, share-based compensation, acquisition related costs, goodwill impairment expense, restructuring expenses and the change in fair value of contingent consideration. The company believes that presenting non-GAAP loss from operations is useful to investors as it eliminates the impact of certain non-cash and acquisition related expenses to allow a direct comparison of loss from operations between periods.

Operating Metrics

We define the number of customers as the number of accounts with a unique account identifier for which we have an active contract in the period indicated. New customers have signed a new contract with a GTY entity in the period.

We define ARR as the annualized revenue run-rate of subscription, maintenance or transaction-based agreements from all customers at a point in time. For transaction based CityBase contracts we use the following calculation: For large projects (>$10K per month) with 12 months or more of history we use the trailing 12 months of history. For large projects with less than 12 months, we calculate an annualized value based on history available. For small projects (<$10K per month) we annualize the most recent month’s activity.

	Exhibit 1
	GTY Technology Holdings Inc.
	Condensed Consolidated Statements of Operations
	(in thousands, except per share amounts)
	(unaudited)
			Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
			September 30, 2021				September 30, 2020				September 30, 2021				September 30, 2020
	Revenues		$	16,257			$	12,587			$	43,833			$	35,027
	Cost of revenues			5,914				4,620				15,872				13,541
	Gross Profit			10,343				7,967				27,961				21,486
	Operating expenses
	Sales and marketing (1)			4,351				3,875				11,620				12,396
	General and administrative (1)			6,281				4,667				17,062				16,607
	Research and development (1)			3,277				3,012				9,295				9,383
	Amortization of intangible assets			3,668				3,683				10,911				10,998
	Restructuring charges			-				2				-				3,666
	Change in fair value of contingent consideration			1,235				-				3,599				29
	Total operating expenses			18,812				15,239				52,487				53,079
	Loss from operations			(8,469	)			(7,272	)			(24,526	)			(31,593	)
	Other income (expense)
	Interest income (expense), net			(789	)			(441	)			(2,501	)			(1,113	)
	Loss from repurchase/issuance of shares			-				-				(5,333	)			(1,390	)
	Change in fair value of warrant liability			(456	)			807				(4,023	)			3,104
	Gain on extinguishment of debt			-				-				3,210				-
	Other income (loss), net			90				(696	)			(9	)			437
	Total other income (expense), net			(1,155	)			(330	)			(8,656	)			1,038
	Loss before income taxes			(9,624	)			(7,602	)			(33,182	)			(30,555	)
	Benefit from income taxes			93				384				154				2,068
	Net loss		$	(9,531	)		$	(7,218	)		$	(33,028	)		$	(28,487	)
	Net loss per share, basic and diluted		$	(0.17	)		$	(0.13	)		$	(0.58	)		$	(0.53	)
	Weighted average common shares outstanding, basic and diluted			57,536				53,842				56,960				53,301
	Net loss		$	(9,531	)		$	(7,218	)		$	(33,028	)		$	(28,487	)
	Other comprehensive loss:
	Foreign currency translation gain (loss)			608				(783	)			(61	)			313
	Total other comprehensive income (loss)			608				(783	)			(61	)			313
	Comprehensive loss		$	(8,923	)		$	(8,001	)		$	(33,089	)		$	(28,174	)
	(1) Amounts include share-based compensation expense as follows:
	Cost of revenues		$	447			$	225			$	1,102			$	575
	Sales and Marketing			420				435				861				1,568
	General and administrative			2,096				1,025				4,190				3,471
	Research and development			373				339				874				724
	Total share-based compensation expense		$	3,336			$	2,024			$	7,027			$	6,338

Exhibit 2
Reconciliations of non-GAAP Financial Measures
(in thousands)
(unaudited)
Non-GAAP Reconciliation	Three Months Ended
	September 30, 2021				June 30, 2021				September 30, 2020
Revenues	$	16,257			$	14,317			$	12,587
Purchase accounting adjustment to revenue		105				104				128
Non-GAAP Revenues	$	16,362			$	14,421			$	12,715
Gross Profit	$	10,343			$	9,101			$	7,967
Purchase accounting adjustment to revenue		105				104				128
Share-based compensation	$	447			$	363				225
Non-GAAP Gross Profit	$	10,895			$	9,568			$	8,320
Gross Margin		64	%			64	%			63	%
Non-GAAP Gross Margin		67	%			66	%			65	%
Loss from operations	$	(8,469	)		$	(7,921	)		$	(7,272	)
Purchase accounting adjustment to revenue		105				104				128
Amortization of intangibles		3,668				3,644				3,683
Share-based compensation		3,336				1,868				2,024
Restructuring charges		-				-				2
Change in fair value of contingent consideration		1,235				1,250				-
Non-GAAP Loss from operations	$	(125	)		$	(1,055	)		$	(1,435	)
	Nine Months Ended
	September 30, 2021				September 30, 2020
Revenues	$	43,833			$	35,027
Purchase accounting adjustment to revenue		331				589
Non-GAAP Revenues	$	44,164			$	35,616
Gross Profit	$	27,961			$	21,486
Purchase accounting adjustment to revenue		331				589
Share-based compensation		1,102				575
Non-GAAP Gross Profit	$	29,394			$	22,650
Gross Margin		64	%			61	%
Non-GAAP Gross Margin		67	%			64	%
Loss from operations		(24,526	)			(31,593	)
Purchase accounting adjustment to revenue		331				589
Amortization of intangibles		10,911				10,998
Share-based compensation		7,027				6,338
Restructuring charges		-				3,666
Change in fair value of contingent consideration		3,599				29
Non-GAAP Loss from operations	$	(2,658	)		$	(9,973	)

Exhibit 3
GTY Technology Holdings Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
		September 30,				December 31,
			2021				2020
Assets
Current assets:
Cash and cash equivalents		$	15,327			$	22,800
Accounts receivable, net			11,068				9,994
Prepaid expenses and other current assets			4,029				2,583
Total current assets			30,424				35,377
Property and equipment, net			3,312				3,891
Intangible assets, net			90,196				101,107
Goodwill			284,635				284,635
Other assets			6,466				7,437
Total assets		$	415,033			$	432,447
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$	4,939			$	6,366
Deferred revenue - current portion			24,994				22,304
Contingent consideration - current portion			317				743
Other current liabilities			1,045				1,897
Total current liabilities			31,295				31,310
Deferred revenue - less current portion			1,785				1,602
Warrant liability			7,063				3,040
Deferred tax liability			17,307				17,494
Contingent consideration - less current portion			45,730				42,530
Term loan, net			24,331				26,632
Other long-term liabilities			2,738				3,074
Total liabilities			130,249				125,682
Commitments and contingencies
Shareholders’ equity:
Common stock			6				6
Exchangeable shares			50,637				54,224
Additional paid in capital			398,286				380,881
Accumulated other comprehensive income (loss)			(55	)			6
Treasury stock			(8,343	)			(5,633	)
Accumulated deficit			(155,747	)			(122,719	)
Total shareholders' equity			284,784				306,765
Total liabilities and shareholders’ equity		$	415,033			$	432,447

	Exhibit 4
	GTY Technology Holdings Inc.
	Condensed Statement of Cash Flows
	(in thousands)
	(unaudited)
			Nine Months Ended				Nine Months Ended
			September 30, 2021				September 30, 2020
	Cash flows from operating activities:
	Net loss		$	(33,028	)		$	(28,487	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation of property and equipment			764				439
	Amortization of intangible assets			10,911				10,998
	Amortization of right of use assets			1,354				1,107
	Share-based compensation			7,027				6,338
	Deferred income tax benefit			(154	)			(2,068	)
	Loss on issuance/repurchase of shares			5,333				1,390
	Change in fair value of warrant liability			4,023				(3,104	)
	Change in fair value of contingent consideration			3,599				29
	Gain on extinguishment of debt			(3,210	)			-
	Amortization of deferred debt issuance costs			648				395
	Other			305				90
	Changes in operating assets and liabilities:
	Accounts receivable			(1,118	)			(1,387	)
	Prepaid expenses and other assets			(1,600	)			(1,564	)
	Accounts payable and accrued liabilities			(1,454	)			(1,212	)
	Deferred revenue and other liabilities			2,868				4,708
	Operating lease liabilities			(891	)			(1,202	)
	Net cash (used in) provided by operating activities			(4,623	)			(13,530	)
	Cash flows from investing activities:
	Capital expenditures			(203	)			(2,850	)
	Net cash (used in) provided by investing activities			(203	)			(2,850	)
	Cash flows from financing activities:
	Proceeds from borrowings, net of issuance costs			-				14,543
	Contingent consideration payments			(825	)			(27	)
	Common stock repurchases			(8,043	)			-
	Proceeds from issuance of common stock, net of costs			6,790				-
	Other			(523	)			(380	)
	Net cash provided by (used in) financing activities			(2,601	)			14,136
	Effect of foreign currency on cash			(46	)			88
	Net change in cash and cash equivalents			(7,473	)			(2,156	)
	Cash and cash equivalents, beginning of period			22,800				8,374
	Cash and cash equivalents, end of period			15,327				6,218

 

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Company Contacts:

Investor Relations

ir@gtytechnology.com

1-877-465-3200

Source: GTY Technology Holdings Inc.

FAQ

What were GTY Technology Holdings' Q3 2021 revenue figures?

GTY reported total revenue of $16.3 million for Q3 2021, a 29% increase year-over-year.

How did GTY's annual recurring revenue change in Q3 2021?

The annual recurring revenue increased to $48.5 million, reflecting a 25% growth year-over-year.

What is the outlook for GTY Technology Holdings for Q4 2021?

GTY expects non-GAAP revenue for Q4 2021 to range from $16.3 million to $16.8 million, indicating approximately 25% year-over-year growth.

Did GTY Technology Holdings report a profit or loss in Q3 2021?

GTY reported a net loss of $(9.5) million for Q3 2021, which is larger than the $(7.2) million reported in Q3 2020.