GTY Technology Holdings Announces Fourth Quarter and Full Year 2020 Financial Results

BOSTON–(BUSINESS WIRE)–Feb 16, 2021–
GTY Technology Holdings Inc. (Nasdaq: GTYH) (“GTY”), a leading vertical SaaS/Cloud solution provider for the public sector, today announced financial results for the fourth quarter and full year ended December 31, 2020.
“We closed out a year that presented challenges with another quarter of disciplined execution and strong results. We achieved 14% revenue growth, another quarter of positive cash flow and are particularly pleased with our ARR growth of 25%,” said TJ Parass, CEO of GTY. “We have great momentum across our business and are taking market share. We remain laser focused on providing our customers with the level of support they have come to expect, while also introducing new prospects to our industry leading solutions. Our execution and results are driven by the exceptional team of men and women who deliver for our customers every day. We are grateful for having the best professionals in the industry who have chosen to grow with GTY.”
“Looking back on the year, we saw strong demand for our products as more and more public sector organizations are pushing to modernize and transform their operations. The fact that they are investing in our technology while dealing with budget shortfalls amid their pandemic response shows the mission critical nature of our software. We are impressed with the quality of our customers and their efforts to improve internal performance and the quality of service to their citizens.”
Fourth Quarter 2020 Financial Highlights

  • Revenue: Total GAAP revenue for the fourth quarter of 2020 was $13.1 million, up 14% compared to $11.5 million in the fourth quarter of 2019. Total non-GAAP revenue for the fourth quarter of 2020 was $13.2 million, up 10% compared to $12.0 million in the fourth quarter of 2019.
  • Gross Profit: Gross profit for the fourth quarter of 2020 was $8.2 million, compared to $6.6 million for the fourth quarter of 2019. Gross margin for the fourth quarter of 2020 was 62%, compared to 58% for the fourth quarter of 2019. Non-GAAP gross profit for the fourth quarter of 2020 was $8.5 million, compared to $7.4 million for the fourth quarter of 2019. Non-GAAP gross margin was 65% for the fourth quarter of 2020, compared to 62% for the fourth quarter of 2019.
  • Operating (Loss): Operating loss for the fourth quarter of 2020 was $(11.1) million, compared to an operating loss of $(42.6) million in the fourth quarter of 2019. Non-GAAP operating loss for the fourth quarter of 2020 was $(1.1) million, compared to an operating loss of $(5.4) million in the fourth quarter of 2019.
  • Net (Loss): Net loss for the fourth quarter of 2020 was $(12.4) million, or $(0.23) per share, based on 53.9 million weighted average shares outstanding. During the fourth quarter of 2019, net loss was $(36.5) million, or $(0.70) per share, based on 52.2 million weighted average shares outstanding.

Full Year 2020 Financial Highlights

  • Revenue: Total GAAP revenue for the full year of 2020 was $48.1 million, up 32% compared to $36.4 million in 2019. Total non-GAAP revenue for the full year of 2020 was $48.8 million, up 20% compared to $40.5 million in 2019.
  • Gross Profit: Gross profit for the full year of 2020 was $29.7 million, compared to $22.9 million in 2019. Gross margin for the full year of 2020 was 62%, compared to 63% in 2019. Non-GAAP gross profit for the full year of 2020 was $31.2 million, compared to $27.2 million in 2019. Non- GAAP gross margin for the full year of 2020 was 64%, compared to 67% in 2019.
  • Operating (Loss): Operating loss for the full year of 2020 was $(42.7) million, compared to an operating loss of $(105.5) million in the full year of 2019. Non-GAAP operating loss for the full year of 2020 was $(11.1) million, compared to an operating loss of $(19.9) million in the full year of 2019.
  • Net (Loss): Net loss for the full year of 2020 was $(44.0) million, or $(0.82) per share, based on 53.5 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 over year unless otherwise provided.
Fourth Quarter 2020 Highlights and Key Metrics

  • Free cash flow positive for the quarter of $0.4 million
  • Replaced our $12 million unsecured credit facility with a $25 million secured credit facility
  • Raised $7 million through an equity sale in December 2020
  • The number of customers was 1,768 as of December 31, 2020, an increase of 15% from 1,542 as of December 31, 2019.

Additional information regarding our new customers, total customers and Annual Recurring Revenue and how each are calculated are included below.
Financial Outlook
As of February 16, 2021, GTY Technology Holdings is providing guidance for its first quarter and full year 2021 as follows:

  • First Quarter 2021 Guidance: Total Non-GAAP revenue is expected to be in the range of $12.5 million to $13.0 million or approximately 10% year over year growth.
  • Full Year 2021 Guidance: Total Non-GAAP revenue is expected to be in the range of $57.0 million to $60.0 million or approximately 20% year over year growth.

Conference Call and Webcast
GTY will hold its quarterly earnings call on February 16, 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, 2019 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.
Presentation of Predecessor and Successor Financial Results
As a result of the business combination, GTY is the acquirer for accounting purposes and Bonfire, CityBase, eCivis, Open Counter, Questica, and Sherpa are the acquirees and accounting predecessor. The company’s financial statement presentation distinguishes the company’s presentations into two distinct periods, the period up to the closing date (labeled “Predecessor”) and the period including and after that date (labeled “Successor”). The merger was accounted for as a business combination using the acquisition method of accounting, and the Successor financial statements reflect a new basis of accounting that is based on the fair value of the net assets acquired.
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. In addition, as the business combination occurred on February 19, 2019, GTY believes reviewing the operating results on a pro forma basis is more useful in discussing the overall operating performance when compared to the same period in the prior year. Therefore, to compare the twelve months ended December 31, 2020 to the twelve months ended December 30, 2019, the company combined the GAAP and non-GAAP financial measures of the Predecessor period from January 1, 2019 through February 18, 2019 and the Successor period from February 19, 2019 through December 31, 2019 (“S/P Combined 2019”).
Non-GAAP Revenues. Non-GAAP revenues are defined as GAAP revenues adjusted for the impact of purchase accounting resulting from its 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 its 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 its 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)
                 
Successor   Predecessor
  Three Months
Ended
  Three Months
Ended
  Year ended   February 19, 2019
through
  January 1, 2019
through
  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019   February 18, 2019
Revenues $ 13,101   $ 11,481   $ 48,128   $ 31,515   $ 4,928  
Cost of revenues   4,927     4,838     18,468     11,928     1,614  
Gross Profit   8,174     6,643     29,660     19,587     3,314  
 
Operating expenses
Sales and marketing (1)   3,754     4,002     16,150     13,088     1,394  
General and administrative (1)   5,136     7,206     21,743     23,010     1,749  
Research and development (1)   2,775     3,936     12,158     11,546     1,580  
Amortization of intangible assets   3,683     3,414     14,681     12,809     32  
Acquisition costs       3,797         36,988     151  
Goodwill impairment   2,000     32,198     2,000     32,198  
Restructuring charges           3,666          
Change in fair value of contingent consideration   1,951     (5,323 )   1,980     (6,135 )   (37 )
Total operating expenses   19,299     49,230     72,378     123,504     4,869  
Loss from operations   (11,125 )   (42,587 )   (42,718 )   (103,917 )   (1,555 )
 
Other income (expense)
Interest income (expense), net   (645 )   (23 )   (1,758 )   225     (170 )
Loss from repurchase/issuance of shares   (666 )       (2,056 )   (1,032 )    
Other income (loss), net   (359 )   331     78     472     12  
Total other income (expense), net   (1,670 )   308     (3,736 )   (335 )   (158 )
 
Loss before income taxes   (12,795 )   (42,279 )   (46,454 )   (104,252 )   (1,713 )
Benefit from income taxes   371     5,776     2,439     8,595      
Net loss   (12,424 )   (36,503 )   (44,015 )   (95,657 )   (1,713 )
 
Deemed dividend for Exchangeable Shares – Series C               (183 )    
Net loss applicable to common shareholders $ (12,424 ) $ (36,503 ) $ (44,015 ) $ (95,840 ) $ (1,713 )
 
 
Net loss per share, basic and diluted $ (0.23 ) $ (0.70 ) $ (0.82 ) $ (1.88 )
Weighted average common shares outstanding, basic and diluted   53,893     52,208     53,450     50,867  
 
Net loss $ (12,424 ) $ (36,503 ) $ (44,015 ) $ (95,657 ) $ (1,713 )
Other comprehensive loss:
Foreign currency translation gain (loss)   (677 )       (364 )   370      
Total other comprehensive income (loss)   (677 )       (364 )   370      
Comprehensive loss $ (13,101 ) $ (36,503 ) $ (44,379 ) $ (95,287 ) $ (1,713 )
 
(1) Amounts include share-based compensation expense as follows:
Cost of revenues $ 236   $ 229   $ 811   $ 229   $  
Sales and Marketing   466     569     2,034     2,032      
General and administrative   1,367     1,444     4,838     2,729     61  
Research and development   214     320     938     439      
Total share-based compensation expense $ 2,283   $ 2,562   $ 8,621   $ 5,429   $ 61  
 
Exhibit 2
Reconciliations of non-GAAP Financial Measures
(in thousands)
(unaudited)
 
         
Non-GAAP Reconciliation Three Months Ended
December 31, 2020   September 30, 2020   December 31, 2019
Revenues $ 13,101   $ 12,587   $ 11,481  
Purchase accounting adjustment to revenue   126     128     529  
Non-GAAP Revenues $ 13,227   $ 12,715   $ 12,010  
 
 
Gross Profit $ 8,174   $ 7,967   $ 6,643  
Purchase accounting adjustment to revenue   126     128     529  
Share-based compensation $ 236   $ 225     229  
Non-GAAP Gross Profit $ 8,536   $ 8,320   $ 7,401  
 
Gross Margin   62 %   63 %   58 %
Non-GAAP Gross Margin   65 %   65 %   62 %
 
Loss from operations $ (11,125 ) $ (7,272 ) $ (42,587 )
Purchase accounting adjustment to revenue   126     128     529  
Amortization of intangibles   3,683     3,683     3,414  
Share-based compensation   2,283     2,024     2,562  
Acquisition costs           3,797  
Goodwill impairment expense   2,000         32,198  
Restructuring charges       2      
Change in fair value of contingent consideration   1,951         (5,323 )
Non-GAAP Loss from operations $ (1,082 ) $ (1,435 ) $ (5,410 )
 
 
Year Ended December 31,
2020   2019
Revenues – Successor Period $ 48,128   $ 31,515  
Revenues – Predecessor Period       4,928  
Pro forma as Adjusted Revenues   48,128     36,443  
Purchase accounting adjustment to revenue   715     4,104  
Non-GAAP Pro forma as Adjusted Revenues $ 48,843   $ 40,547  
 
 
Gross Profit – Successor Period $ 29,660   $ 19,587  
Gross Profit – Predecessor Period       3,314  
Pro forma as Adjusted Gross Profit   29,660     22,901  
Purchase accounting adjustment to revenue   715     4,104  
Share-based compensation   811     229  
Non-GAAP Pro forma as Adjusted Gross Profit $ 31,186   $ 27,234  
 
Gross Margin – Successor Period   62 %   62 %
Gross Margin – Predecessor Period   N/A     67 %
Pro forma as Adjusted Gross Margin   62 %   63 %
Non-GAAP Pro forma as Adjusted Gross Margin   64 %   67 %
 
Loss from operations – Successor Period $ (42,718 ) $ (103,917 )
Loss from operations – Predecessor Period       (1,555 )
Pro forma as Adjusted Loss from operations   (42,718 )   (105,472 )
Purchase accounting adjustment to revenue   715     4,104  
Amortization of intangibles   14,681     12,841  
Share-based compensation   8,621     5,490  
Acquisition costs       37,139  
Goodwill impairment expense   2,000     32,198  
Restructuring charges   3,666      
Change in fair value of contingent consideration   1,980     (6,172 )
Non-GAAP Pro forma as Adjusted Loss from operations $ (11,055 ) $ (19,872 )
 
Exhibit 3
GTY Technology Holdings Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
December 31,   December 31,
2020   2019
Assets
Current assets:
Cash and cash equivalents $ 22,800   $ 8,374  
Accounts receivable, net   9,994     9,184  
Prepaid expenses and other current assets   2,583     3,047  
Total current assets   35,377     20,605  
 
Property and equipment, net   3,891     1,697  
Intangible assets, net   101,107     115,788  
Goodwill   284,635     286,635  
Other assets   8,797     9,668  
Total assets $ 433,807   $ 434,393  
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses $ 6,366   $ 8,443  
Deferred revenue – current portion   22,304     17,346  
Contingent consideration – current portion   743     12,680  
Other current liabilities   1,830     2,406  
Total current liabilities   31,243     40,875  
 
Deferred revenue – less current portion   1,602     1,264  
Deferred tax liability   17,494     20,276  
Contingent consideration – less current portion   42,530     41,233  
Term loan, net   26,632      
Other long-term liabilities   4,501     5,122  
Total liabilities   124,002     108,770  
 
Commitments and contingencies
 
Shareholders’ equity:
Common stock   6     5  
Exchangeable shares   54,224     45,681  
Additional paid in capital   390,232     369,756  
Accumulated other comprehensive income   6     370  
Treasury stock   (5,633 )   (5,174 )
Accumulated deficit   (129,030 )   (85,015 )
Total shareholders’ equity   309,805     325,623  
Total liabilities and shareholders’ equity $ 433,807   $ 434,393  
 
Exhibit 4
GTY Technology Holdings Inc.
Condensed Statement of Cash Flows
(in thousands)
(unaudited)
 
Successor   Predecessor
  Year ended   February 19, 2019
through
  January 1, 2019
through
  December 31, 2020   December 31, 2019   February 18, 2019
Cash flows from operating activities:
Net loss $ (44,015 ) $ (95,657 ) $ (1,713 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment   863     355     148  
Amortization of intangible assets   14,681     12,809     32  
Amortization of right of use assets   2,034     1,298     194  
Share-based compensation   8,621     5,429     61  
Deferred income tax benefit   (2,439 )   (8,595 )    
Loss on issuance of shares   2,056          
Goodwill impairment   2,000     32,198      
Change in fair value of contingent consideration   1,980     (6,135 )   (37 )
Amortization of deferred issuance costs   759          
Other   165     (26 )   (12 )
Changes in operating assets and liabilities:
Accounts receivable   (818 )   (5,276 )   2,190  
Prepaid expenses and other assets   (725 )   (1,536 )   202  
Accounts payable and accrued liabilities   (2,372 )   (1,000 )   (781 )
Deferred revenue and other liabilities   6,335     9,985      
Operating lease liabilities   (2,099 )   (1,079 )    
Net cash (used in) provided by operating activities   (12,974 )   (57,230 )   284  
 
Cash flows from investing activities:
Proceeds from cash held in trust       217,642      
Sale of marketable securities           1,531  
Acquisitions, net of cash acquired       (179,423 )    
Capitalization of internal-use software   (311 )   (793 )    
Capital expenditures   (2,712 )   (639 )   (15 )
Net cash (used in) provided by operating activities   (3,023 )   36,787     1,516  
 
Cash flows from financing activities:
Proceeds from borrowings, net of issuance costs   37,803         35  
Repayment of borrowings   (12,000 )   (486 )   (69 )
Contingent consideration payments   (1,286 )   (920 )    
Proceeds received from private placement of Common Stock, net of costs   7,000     25,450      
Common stock repurchases   (459 )   (4,174 )    
Redemption of Class A Ordinary Shares       (113,982 )    
Proceeds received from private placement of Class A shares, net of costs       125,258      
Redemption of Exchangeable Shares – Class C       (1,323 )    
Other   (548 )   (1,262 )   (505 )
Net cash provided by (used in) financing activities   30,510     28,561     (539 )
 
Effect of foreign currency on cash   (87 )   204     (721 )
 
Net change in cash and cash equivalents   14,426     8,322     540  
Cash and cash equivalents, beginning of period   8,374     52     13,929  
Cash and cash equivalents, end of period   22,800     8,374     14,469  
 

 
View source version on businesswire.com:https://www.businesswire.com/news/home/20210216006126/en/
CONTACT: Investor Relations or Michael Bowen / Marc Griffin
ir@gtytechnology.com
(702) 945-2898
KEYWORD: UNITED STATES NORTH AMERICA CANADA MASSACHUSETTS
INDUSTRY KEYWORD: PROFESSIONAL SERVICES DATA MANAGEMENT PUBLIC POLICY/GOVERNMENT STATE/LOCAL TECHNOLOGY SOFTWARE ACCOUNTING
SOURCE: GTY Technology Holdings Inc.
Copyright Business Wire 2021.
PUB: 02/16/2021 04:05 PM/DISC: 02/16/2021 04:05 PM
http://www.businesswire.com/news/home/20210216006126/en