Executive Summary

Solid quarter with double-digit topline growth: revenue +10% YoY to $5.97M; diluted EPS $0.09, +13% YoY; operating income +28% YoY to $1.89M . Cash ended at $28.8M with no bank debt; cash from operations was $1.54M .
Versus S&P Global consensus: EPS in line ($0.09), revenue a slight miss (−0.2%); operating execution still strong, aided by automation and cost discipline (SG&A +6% vs revenue +10%) .
Mix and model resiliency: ~99% recurring revenue; revenue per employee rose to $356K annualized, underscoring automation leverage .
Capital returns intact: $0.02 quarterly dividend (third 10% raise), ongoing preferred redemptions ($0.75M in Q1) and buybacks; ~50% of annual cash from operations targeted for shareholder returns .
Watch items: NOLs largely exhausted; effective tax rate to rise above ~6% going forward—moderating EPS conversion despite operating outperformance .

What Went Well and What Went Wrong

What Went Well

Operating leverage: Revenue grew ~10% while total operating expense grew ~3%; operating income +28% YoY to $1.89M, driven by scale and automation .
High-quality revenue and productivity: ~99% recurring revenue and $356K revenue per employee annualized signal durable model efficiency .
Strategic momentum and network effects: CEO highlighted RTN leadership and automation/AI that fixes ~70% initial data errors in the supply chain, enabling scalable onboarding and cross-sell across compliance and supply chain solutions (“garbage in, garbage out” solved via proprietary automation) .

Selected quotes:

“We continue to grow revenue, expand our operating margins, net margins, earnings per share, and generate substantial cash.” — CEO
“We delivered $356,000 of revenue per employee on an annualized basis... due to our lean nature, efficient operations, and our ongoing use and expansion of automation.” — CFO
“We take data… identify and increasingly actually correct the errors automatically.” — CEO

What Went Wrong

Taxes rising post‑NOL: With NOLs largely used/expired after 30+ profitable quarters, the effective tax rate will be “higher than 6%” going forward, muting conversion from operating income to GAAP net income .
Cash conversion timing: Cash from operations $1.54M, down from $1.87M a year ago, largely due to conversion of deferred revenue to booked revenue (timing, not demand) .
Minor revenue shortfall vs consensus: Revenue of $5.97M slightly under S&P consensus of $5.985M, despite internal execution and 99% recurring revenue base (see Estimates Context) .

Industry/macro note:

Government shutdown effects viewed as modest caution for the food industry (FDA/SNAP), not a material company impact .

Financial Results

GAAP snapshot (oldest → newest)

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($)	$5,913,732	$5,760,284*	$5,971,467
Total Operating Expense ($)	$4,104,879	$4,200,000	$4,077,594
Income from Operations ($)	$1,808,853	$1,600,000	$1,893,873
GAAP Net Income ($)	$1,965,788	$1,800,000	$1,819,529
Diluted EPS ($)	$0.10	$0.09	$0.09

Notes: Operating margin (calc.) improved YoY in Q1 (IO/Revenue ~31.7% vs ~27.2% last year) based on cited inputs .

Versus S&P Global consensus (oldest → newest)

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue Consensus Mean ($)	$6,000,000*	$6,250,000*	$5,985,000*
Revenue Actual ($)	$5,913,732	$5,760,284*	$5,971,467
Surprise (%)	−1.4%	−7.8%	−0.2%
Primary EPS Consensus Mean ($)	$0.09*	$0.09*	$0.09*
Diluted EPS Actual ($)	$0.10	$0.09	$0.09
Surprise (%)	+11.1%	0.0%	0.0%

Q1: EPS in line; revenue slight miss.
Q4: More pronounced revenue miss; EPS in line.
Q3: EPS beat; modest revenue miss.

Estimates and items marked with * are retrieved from S&P Global.

KPIs and balance sheet indicators (oldest → newest)

KPI	Q3 2025	Q4 2025	Q1 2026
Recurring Revenue (% of total)	98%	~99%	~99%
Cash & Equivalents ($M)	$28.1	$28.6	$28.8
Revenue per Employee (annualized)	$343,000	$343,000	$356,000
Deferred Revenue (current, $)	$3,675,880	$3,175,908	$2,686,197
Cash from Operations ($)	—	—	$1,538,447

Segment disclosure: Not provided in Q1 materials; model is subscription SaaS across traceability, compliance, and supply chain .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue growth target	Multi‑year	10%–20% annual growth	Reaffirmed 10%–20%	Maintained
Profit growth vs revenue	Multi‑year	Profitability to outpace revenue	Reaffirmed	Maintained
Capital returns	Ongoing	~50% of annual cash from operations returned	Reaffirmed	Maintained
Dividend	Ongoing	$0.01815/qtr ($0.0726/yr)	$0.02/qtr ($0.08/yr)	Raised
Preferred redemption	Through Dec 2026	Ongoing redemptions	266,005 shares remaining; ~$2.85M; target by Dec 2026; $750K/quarter pace	Maintained; updated status
Effective tax rate	Forward	~4%–6% historically (NOL-supported)	“Higher than 6%” going forward as NOLs exhausted	Higher

No formal quarterly revenue/EPS guidance ranges issued.

Earnings Call Themes & Trends

Topic	Q3 2025 (Mar 31)	Q4 2025 (Jun 30)	Q1 2026 (Sep 30)	Trend
Automation & AI	Wizard onboarding automates ~2/3 of traceability onboarding; aim to reach smaller suppliers efficiently	Emphasis on automation to elevate margins and scalability	Multi‑year platform modernization to embed AI, expand automation, increase productivity; negligible cash expense impact (capex reallocation)	Intensifying investment; broader platform scope
Traceability network (RTN)	Largest network claims; supplier‑centric “middle‑out” pull boosting TAM; FDA enforcement delay extends runway	RTN leadership reiterated; cross‑sell pipeline rising	RTN viewed as de facto standard; daily adds; data integrity (70% error pre‑clean) core value prop	Momentum building; network effects
Cross‑sell	Increasing as shared platform lowers friction	Growing opportunities across solutions	“Growth in all lines,” referrals both upstream and downstream	Expanding
Taxes/NOLs	NOLs discussed; timing to full taxpayer queried	—	NOLs largely used/expired; tax rate >6% going forward	Headwind emerging
Capital allocation	50% cash return; preferred redemption cadence; dividend raises	Same; buybacks/dividend; no debt	Same; $7.8M buyback capacity; $0.02 dividend; preferred redemptions	Consistent
Macro/policy	Tariffs seen as minor uncertainty	Tariffs: no material impact	Gov shutdown: modest industry caution; not material	Manageable

Management Commentary

Strategy and moat: “We’ve established ReposiTrak and RTN as the dominant player… I think over time those advantages will create an even bigger moat” .
Data integrity as differentiator: “On average the initial data we receive… has a 70% error rate… Our systems… identify and increasingly actually correct the errors automatically” .
Operating discipline: “We delivered $356,000 of revenue per employee… due to… ongoing use and expansion of automation” .
Capital allocation and build vs buy: “If M&A opportunities… don’t make financial sense… then let’s build it, not buy it. We are exceptional at building things.” .
Tax normalization: “Our NOLs… have largely run out… our tax rate will be higher than 6% going forward” .

Q&A Highlights

Government shutdown: Industry caution via FDA/SNAP, but no material company impact noted .
TAM expansion via by‑ingredient: Supplier‑driven “middle‑out” pull substantially expands addressable market; referrals propagate both upstream and downstream .
Platform modernization cost/impact: No meaningful cash expense increase expected; reallocation of capex and developer resources; goal is higher productivity and embedded AI .
Capital allocation priorities: Continue 50% cash returns, preferred redemptions (~$750K/qtr), evaluate buybacks opportunistically; one‑time dividend not favored .
M&A: Screen regularly; must be accretive and align with strategy; bias to build if targets don’t meet criteria .

Estimates Context

Coverage remains thin (one estimate for revenue and EPS each of the last three quarters), limiting “consensus” robustness. Q1 revenue of $5.971M was a −0.2% miss vs $5.985M, while diluted EPS of $0.09 matched the $0.09 mean; EBITDA exceeded consensus (actual ~$2.14M vs ~$2.09M) (S&P Global).
Given recurring revenue (~99%) and cost control, estimate paths may hold for EPS despite higher taxes; revenue estimates could reflect continued low‑teens growth and cross‑sell momentum, but the tax rate reset implies modestly lower net income conversion versus past NOL‑supported periods .

Estimates and items above marked with * (and EBITDA comparisons) are retrieved from S&P Global.

Key Takeaways for Investors

Quality growth continues: Double‑digit revenue growth with expanding operating leverage and ~99% recurring revenue underpins durability .
Execution offsets small revenue miss: EPS in line despite minor revenue shortfall vs S&P consensus as automation supports margins .
Tax headwind now in focus: With NOLs largely exhausted, a structurally higher tax rate will moderate EPS conversion; factor into forward models .
Structural advantages compound: RTN scale, data integrity IP, and embedded AI/automation provide a widening moat and cross‑sell catalysts .
Balance sheet strength enables optionality: $28.8M cash, no debt; consistent capital returns (dividend raises, preferred redemption, buyback capacity) provide support .
Medium‑term: Platform modernization (AI at the core) should enhance productivity and scalability with limited cash burden—potential upside to margins over time .
Near‑term trading framework: Watch datapoints on supplier onboarding velocity, deferred revenue trends, and tax‑rate disclosures; beats can come from opex discipline and cross‑sell uptake, while misses likely stem from macro‑related onboarding timing.

Sources:

Q1 FY26 press release, financial statements and highlights
Q1 FY26 earnings call transcript
Q4 FY25 press release and call excerpts
Q3 FY25 press release and call excerpts
Dividend press release