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Edited Transcript of JTPY earnings conference call or presentation 16-Aug-18 1:00pm GMT

Q2 2018 JetPay Corp Earnings Call

BERWYN Sep 4, 2018 (Thomson StreetEvents) -- Edited Transcript of JetPay Corp earnings conference call or presentation Thursday, August 16, 2018 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Diane Faro

JetPay Corporation - CEO & Director

* Gregory M. Krzemien

JetPay Corporation - CFO

* Peter B. Davidson

JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary

* Preston Graham

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Conference Call Participants

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* Evan Greenberg

* Gary Frank Prestopino

Barrington Research Associates, Inc., Research Division - MD

* Marco Andres Rodriguez

Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst

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Presentation

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Operator [1]

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Good morning, and thank you for participating in today's conference call to discuss JetPay Corporation's financial results for the Second Quarter and 6 months ended June 30, 2018. (Operator Instructions) Please note this call is being recorded.

I will now turn the call over to Preston Graham, Investor Relations. Mr. Graham?

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Preston Graham, [2]

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Thank you. Good morning, and thank you for participating in today's conference call with JetPay Corporation. Joining me today are Diane Vogt Faro, Chief Executive Officer; Peter Davidson, Vice Chairman and Corporate Secretary; and Gregory Krzemien, Chief Financial Officer. Following management's opening remarks, we will open up the call for your questions. Before I continue, I'd like to take a moment to read the company's safe harbor statement. Our discussion here today may include forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. JetPay'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 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 JetPay's control and are difficult to predict. Factors that may cause such differences include, but are not limited to, those described under the heading Risk Factors in the company's annual report filed with the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2017, the company's quarterly reports on Form 10-Q and the company's current reports on Form 8-K.

Additionally, the company's discussion today also includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA as defined in Regulation G of the Securities and Exchange Act of 1934 as amended. The company reports its financial results in compliance with GAAP but believes that also discussing non-GAAP financial measures provides investors with financial measures it uses in the management of its business. These measures may not be comparable to similarly titled measures reported by other companies. Please refer to the press release issued by the company on Thursday, August 9, 2018, under non-GAAP financial measures for a description of our use of EBITDA and adjusted EBITDA and a reconciliation of EBITDA and adjusted EBITDA to operating loss/income.

I'd like to remind everyone that this call will be available for replay through Thursday, August 30, 2018, starting approximately 2 hours after the completion of the call. Please refer to the August 9 press release for dial-in replay instructions. Now I'd like to turn the call over to JetPay's Diane Faro, Chief Executive Officer.

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Diane Faro, JetPay Corporation - CEO & Director [3]

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Thank you, Preston, and good morning, everyone. Thank you for joining our call and your -- and for your continued interest in our company.

We are pleased to report quarterly net income of $1.5 million, JetPay's first since 2013. This was significantly influenced by our positive settlement of the Valley National Bank lawsuit and also included several onetime expenses. Excluding the onetime items, JetPay would have posted positive net income for the first 6 months of 2018 of approximately $300,000.

JetPay met second quarter revenue expectations. Revenues were $15.2 million, up 12.6% versus the same period in 2017. In the first half of 2018, revenues were $31.1 million, up 11% versus first 6 months 2017.

As noted from our previous call, we talked about we moved to the new ASC 606 accounting rules. If we were still under the previous ASC 605 accounting standards, revenue growth for the first 6 months of 2018 would have been 13.8% versus the reported 11%.

Payment Services revenue increased 12.9% for the second quarter 2018, as expected. It's driven by new business, JetX cash discount program and additional revenue from existing customers.

Government services continues to gain opportunities with new contracts awarded in Texas, Nevada and Missouri for the first half of 2018. The State of Illinois continues boarding participants and is on track.

HR & Payroll Service revenue increased 12.1% for the second quarter. New Workforce Today clients in the cross-sell of additional services to existing clients have created solid double-digit growth.

JetPay continues to enhance our bottom line with adjusted EBITDA of $1.5 million for the quarter, up 25.5%; and $4 million year-to-date, up 6.5%. Again, without the impact of ASC 606, year-to-date JetPay's pro forma EBITDA would have increased 27.2%.

Here are some additional highlights worth mentioning. We launched JetSource, a complete HR solution that includes outsourcing of additional support services for businesses of all sizes. JetSource will continue to effectively increase revenue as well as improve customer retention. Payment Services signed 24 new ISO and ISV partners through midyear 2018, and as of July 2018, we have boarded as many new merchants as we did for the entire year of 2017. Our JetX cash discount program continues to exhibit strong growth with $2.2 million in net revenue annual run rate against $700,000 this time last year.

We are confident in our performance for the second half of 2018 and will continue that in future quarters. Improving and expanding our technology and products has allowed us to win significant new business, and delivering exceptional service remains our focus every day.

Our revenue attrition rates in both Payments and HR & Payroll Services is well below 10% on an annualized basis, which has proved our commitment to building relationships is on track.

I now turn the call over to our Chief Financial Officer, Greg Krzemien, who will take you through additional financial highlights. Greg, please go ahead.

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Gregory M. Krzemien, JetPay Corporation - CFO [4]

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Thank you, Diane. As Diane mentioned, we are extremely pleased with our performance in the second quarter and the first 6 months of 2018, including our consolidated growth rate of 12.6% in our second quarter versus 9.5% in our first quarter. In our Payment Services segment, we achieved second quarter 2018 gross margins of 42% with 43.1% in the first 6 months of 2018. This is slightly above our as adjusted first 6 months of 2017 margin of 42.8%.

In our HR & Payroll segment, we were able to report gross margins in Q2 '18 at 50.4% with 54.4% for the first 6 months of '18, significantly above our as adjusted first 6 months of '17 margins of 51.3%.

We are maintaining and growing these margins despite the investments we continue to make in our implementation and operations personnel and in technology as a result of the continued shift of our revenue to our HCM Workforce Today platform. We expect this gross margin percentage to remain strong in '18 as we continue to benefit from the revenue growth and the investments we're continually making and growing the HCM solutions and our JetSource and other products in both our new and existing customers.

As with our direct cost, selling, general and administrative, or SG&A, expenses were controlled well in Q2 of 2018 and the first 6 months. For Q2 of '18, our SG&A expenses on a pro forma basis, excluding some nonrecurring items, would have been $5.2 million or 33.9% of revenue as compared to $4.4 million in 2017 or 32.8% of revenues. For the first 6 months of 2018, SG&A expenses, again on a pro forma basis, would have been $10.1 million or 33.6% of revenues as compared to $9 million in 2017 or 32.1% of revenues. We see this slight increase in pro forma SG&A expense as percentage revenue, that's directly related to our continued investment in sales professionals and marketing programs.

We expect to leverage these SG&A expenses significantly going forward, with the cost increasing at a much slower rate than our revenue growth in the latter part of '18 and the future years.

As Diane mentioned, we use cash flow or EBITDA and adjusted EBITDA, excluding the nonrecurring items that we detailed in our press release, as key measurements of our operating performance. Adjusted EBITDA, excluding these nonrecurring and noncash items, for Q2 of '18 were $1.6 million as compared to $1.3 million in Q2 of '17 and $4 million for the first 6 months of '18 as compared to $3.8 million for the same period in '17, this despite, again, the impact on Q1 of '17's adjusted EBITDA of the adoption of the ASC 606.

Before I turn things back over to our operator for our Q&A session, just like to focus on a couple of positive highlights on our balance sheet. We ended Q2 of '18 with cash and cash equivalents of $8.7 million and positive working capital of $1.6 million. The ratio of our total debt to total capitalization at June 30 of '18 was 19.2% versus 20.5% at December 31, '17. Our total debt of $15.3 million versus $16.1 million at December 31 is, again, one of the lowest debt level since the start of operations in December of 2016. Our total equity at June 30 was $64.5 million.

Again, on behalf of Diane, Pete, myself and the board, again, I'd like to thank everyone for calling in this morning and for your continued support and interest in JetPay. I would now like to turn the call back over to our operator so we may address any questions you may have. Ashley?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Gary Prestopino with Barrington Research.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [2]

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Couple of questions. In terms of the State of Illinois contract, you will have boarded all of the original participants by the end of Q1 '19. Is that how I read this?

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Diane Faro, JetPay Corporation - CEO & Director [3]

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No. Gary, this is Diane Faro. So as we said even in our second quarter, we will have boarded significant number, probably in the high 80%, around 85%, 88%. The rest will be boarded in the first quarter of 2019.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [4]

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Okay. So then are you, at this point, as you're boarding existing participants, are you going after or calling on the additional 1,200 units of government that don't use the system right now? I mean, are -- have you been out marketing prior to getting the full contract implemented?

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Diane Faro, JetPay Corporation - CEO & Director [5]

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So in respect to the State of Illinois, we are working with the executives of the State of Illinois and putting together a plan. We will start approaching those 1,800 in the fourth quarter of this year and with discussions, again, with respect to the State of Illinois because they will ask us to work with them. So in fourth quarter, we could expect a plan together of the 1,200 and concentrate that development in fourth quarter and throughout 2019.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [6]

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Okay. And then could you maybe tell us a little bit more of how this SmartComply product differs from the Workforce Today product on the human capital management side?

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Peter B. Davidson, JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary [7]

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Yes, this is Pete Davidson. The Workforce Today product is the full suite of products. So it's everything from hire to retire, which includes recruiting, onboarding, employee self-service, 401(k) management, compliance, training, et cetera. So it's the full suite. SmartComply is an element of that suite. So what that does is, for our customers who don't need the whole -- full human capital management suite, the SmartComply product allows them to get to -- attract certain -- use certain components of that, that can help their business without having to pay for the whole thing.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [8]

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So is that kind of like they can try and à la carte the various services on the Workforce Today and you'll put it together for them? Or is it just the standard product that you've developed that they can choose the services they want?

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Peter B. Davidson, JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary [9]

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No, it's part of an à la carte offering to some of the smaller guys. Somebody who's got 300 employees probably needs the whole Workforce Today suite. Somebody who has 40 employees probably doesn't need that, but for instance, they may need more assistance with recruiting because they have high employee turnover. So yes, it's an à la carte where they can select a particular module on top of their normal core payroll processing.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [10]

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Okay. And then lastly, on the gross margin between the various divisions, look, I've been traveling, so I am unable to move on to look at the Q and all that. But Greg, did you say that -- could you just give us the gross margin for -- could you repeat that gross margin year-over-year for Payment Services and HR? Look, I think it was (inaudible) this year, 50.4% this year for HR. What was the gross margin last year?

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Gregory M. Krzemien, JetPay Corporation - CFO [11]

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Yes, I'll kind of give it consolidated and by each segment if that helps. So on a consolidated basis, 6 months this year, so it's 46.6%. For last year, it was 45.6%. If I look at just the Payments segment, for the first 6 months, it was 43.1% versus 42.8%, and on the Payroll, as we saw the most significant shift at this point, went from 51.3% last year 6 months to 54.4%, and again, that's, as I mentioned in my opening comments, directly related to the new HCM products, again, not only Workforce Today, but the SmartComply and the JetSource where it's an à la carte that -- I think, we mentioned before the amount of revenue we get per employee per month, PEPM, on the Workforce Today is significantly greater than our traditional platform, and we continue to -- almost virtually all our growth now is into these new products. So it's definitely starting to bring up the gross profit margins, which is really nice to see.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [12]

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That is great. And then lastly, did you say that the SG&A expense as a percentage of sales should stay pretty steady here in the back half of the year? Or did you say it was going to decline some?

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Gregory M. Krzemien, JetPay Corporation - CFO [13]

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I think we saw it go up still a little bit the first half of the year, about 1%. I think it's going to stay pretty much the same for the rest of the year. We made additional investments. We will continue to make investments in salespeople, but we think that will be offset by the amount of revenue generated. So I think it'll stay pretty much the same as a percentage throughout the year, but I do think we'll start seeing that getting leveraged in 2019 and future years, which is what we're looking forward to.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [14]

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And then -- yes, and then what I'm referring to that I think Diane mentioned that or you said that the SG&A had $600,000 of onetime expenses. So let's round it, it would have been $5.3 million without that onetime. Is that how we should maybe look at it going forward, somewhere around there? Or is it going to stay with the actual level that it was in Q2?

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Gregory M. Krzemien, JetPay Corporation - CFO [15]

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Yes, I mean I kind of like looking at it as you mentioned, without those onetime items because obviously, I mean, a company our size, that's used pretty significantly. So I think if you -- again, if you look at the numbers, which, again, I can get to you again, if you like, but in the press release, you can see the detailed table of the onetime items. If you back those out, I think you're on a reasonable level.

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Operator [16]

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(Operator Instructions) And our next question comes from the line of Marco Rodriguez with Stonegate Capital.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [17]

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A couple of quick follow-up here on the Payroll side. I just wanted to kind of come back on the gross margin that you saw in Q2 at 50% and some change on the Payroll Services significantly higher than historically what you guys normally do in Q2. And if I'm understanding correctly, this is just a volume issue that caused this significant increase in gross margin.

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Gregory M. Krzemien, JetPay Corporation - CFO [18]

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It's, I think, it's a lot of volume, but it really -- I think a lot of it has to do with the switchover from the HCM product to the -- from the regular product, I'm sorry, over to the HCM product. We're just seeing a lot of increase in margins for all these customers. And as I mentioned, our -- I think, probably, 85%, 90% of our new business is going on a new HCM platform or some version of that through the à la carte methods that we've -- or products that we've developed.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [19]

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Got you. Can you maybe help us understand if we're looking year-over-year, comparing the 2Qs, what sort of mix, perhaps if you have that information that is using the new HCM platform now versus last quarter -- last Q2, last year?

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Gregory M. Krzemien, JetPay Corporation - CFO [20]

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When you say mix, what do you mean? Like percentage of the -- our merchants?

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [21]

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Well, if I'm understanding you correctly, you're saying one of the reasons that the gross margins increased significantly versus your historical Q2 numbers is you have a much larger percentage of your clients using the HCM platform, which has a higher margin. So I'm just trying to understand what sort of percentage of the clients in Q2 of '17 were using HCM versus Q2 of '18.

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Gregory M. Krzemien, JetPay Corporation - CFO [22]

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Sure. Sure. If we look at the number of participants, probably less than 10% of our customers are on the HCM platform, but I think, what's more important as I look at our revenues, we're now running probably and, again, this is an estimate, Marco, but I am going to say probably 30%, maybe inching 33% of our revenues are now coming out of the Workforce Today product, or again, one of our hybrid products versus traditional revenue models for payroll processing. So we're seeing that shifting, and the reason why that percentage obviously is greater than the percentage of customers is because it is the larger customers who have more employees on their payrolls.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [23]

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Got you. Okay, and so historically, your Q2 for Payroll Services is the lowest gross margin quarter. So just given the mix shift that you have where more clients are using HCM, should we be expecting that to be kind of the new normal as far as the low point on gross margins for Payroll Services?

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Gregory M. Krzemien, JetPay Corporation - CFO [24]

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Yes, I think that's really safe. I mean, I think we've talked about in the past, and I believe Marco you're well aware of the fact that Q1 and Q4 is when we process all our W-2s, which have significant margin like almost 100%. So that's when we really creep up into the real high 50s in Q1 and Q4, but I think what you're seeing here in Q2 is a good baseline for future growth.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [25]

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Got it. Understood. And then coming back to the SmartComply, can you just give us some information or color in terms of the size of the company or clients that typically would be using that platform?

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Peter B. Davidson, JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary [26]

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Yes, this is Pete. So first of all, many of our -- I mean, obviously, it's a subset of the Workforce Today. So the Workforce Today people would do it. The type of client that would be intending to use the SmartComply product is someone who's using -- who has to recruit a number of people. We do have a significant number of customers who will be smaller for -- that have new restaurants and in the food and dining where they might have significant turnover. We also have staffing companies and other facilities like that. So it's that type of customer. So it could be somebody who only has 20 or 25 employees could take advantage of it if they have -- they were turning over 20% of their staff.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [27]

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Got it. And then shifting gears here to the Payment Services side. In your prepared remarks, I believe, you mentioned some additional opportunities that you're either looking at or getting close to on the government side. Can you provide a little more color there in regards to those additional states?

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Diane Faro, JetPay Corporation - CEO & Director [28]

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So I mean -- so Marco, those are contracted, the ones I had discussed. We were awarded new contracts in the second quarter -- or I mean year-to-date, I mean, for Texas, Nevada and Missouri. So we continue to respond to RFPs in new states because we all know, as we retain customers in those states, they become a referral to other entities and counties within those states for JetPay to acquire more business. So we've been in Missouri several years now, and we continue to get awarded new business and new contracts in the State of Missouri. Nevada is brand new to JetPay. We just signed Nevada in the first half of the year and, again, hopeful that we'll continue to get awarded new business now that we're in Nevada. So just think about that when the RFPs come up in each of these states or counties or whatever, we will continue to respond to those RFPs, and we will look at gaining traction in each of these states. So we can grow the business once we're in there. Does that make sense?

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [29]

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Absolutely. That's helpful. And has there been any sort of creation of a sales force or a team that might be dedicated to the government vertical?

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Diane Faro, JetPay Corporation - CEO & Director [30]

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We have a team. I have a complete team that's dedicated to Government and Utilities. And they go -- just like any other vertical market that you have, they go into the conventions. They know what's going on in that space, and there's probably a team, anywhere from 8 to 10.

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Marco Andres Rodriguez, Stonegate Capital Markets, Inc., Research Division - Director of Research & Senior Research Analyst [31]

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Got you. And last quick question, just in terms of capital structure here. I was wondering if you can maybe talk a little bit about the preferreds, the put day coming up here in October. Any thoughts around there, how we should be thinking about that?

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Diane Faro, JetPay Corporation - CEO & Director [32]

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Well -- and I think we've discussed it in the past. I mean, we all know the preferred shareholders have the right to call for redemption, right? We know that. However, at the current time, we have no indication they will do that. Certain of the preferred holders are members of our board, and just as JetPay and them, we're all looking to maximize our ultimate return. JetPay is poised for the growth of the future in what we've built in technology and products, and I believe everybody wants to see that through. So that's what I -- my comment on that.

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Operator [33]

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Our next question comes from the line of Evan Greenberg with Legend Capital.

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Evan Greenberg, [34]

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Just the last question, you've kind of addressed it, I wanted to go over it, I wanted to know the size and scope of magnitude at these states because it's really exciting to hear that's atop. And then I also wanted to know that I think you talked about like the JetX product at one point or -- JetPay X, the vendor product that's -- a special product that you have where it's less expensive to the vendor but it's included in the purchase price, go over the growth of that.

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Peter B. Davidson, JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary [35]

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Hey, Evan, this is Pete. You were breaking up a little bit. Could you repeat that?

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Diane Faro, JetPay Corporation - CEO & Director [36]

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Yes, I apologize, I had trouble hearing you as well.

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Evan Greenberg, [37]

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You had a hard time hearing me. So first question is -- can you hear me now?

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Diane Faro, JetPay Corporation - CEO & Director [38]

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Yes.

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Evan Greenberg, [39]

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Okay. First question had to do with the size, scope of magnitude at the new states, which was kind of addressed in the last question. And the last one that was with the -- I think it's a JetPay X product?

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Diane Faro, JetPay Corporation - CEO & Director [40]

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The JetX.

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Evan Greenberg, [41]

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JetX. Yes, JetX. We really didn't talk about that. I want to know what that was.

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Diane Faro, JetPay Corporation - CEO & Director [42]

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So JetX is the problem -- I mean, it's a product we've had out probably sometime in late '15, '16, and the market is taking tractions as far as we build. So JetX is the product that allows small businesses to offer a service to their consumer based on how they want to pay. So it's -- if you look at the product -- and it's similar to what happens in government, but if you look at the product, they have the right to look at discounting everything in their store if you transact the transactions by cash. So think about if you go in, say, to a cleaners or to whatever industry and you don't want to pay by credit card, the merchant has -- they're just (inaudible) everything in the stores by cash. And if you want to use a credit card, there's a site -- if there's a fee for using a credit card because the expense is then incurred by the merchant. Now this is a significantly growing product, as we know within Payments, the cost of interchange and all the fees that are charged by the associations continue to rise, and small businesses can't continue to afford it. So we continue to look at our JetX product. We offer it within card present. We've just rolled out in the first half of this year for card not present in the e-commerce space for customers who want to pay by e-check or by card. So it's a phenomenal product, and it's growing in the industry, and small businesses are rolling out this product.

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Evan Greenberg, [43]

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Okay. What percentage size of that business -- right now, it's a small percentage of your overall business but growing fast was my understanding.

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Diane Faro, JetPay Corporation - CEO & Director [44]

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It's still small. I mean, the revenue as I indicated from last year of $700,000 to $2.2 million this year, it's a growing market. It's still small compared to our business, but it's a significantly high growth in our new business.

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Evan Greenberg, [45]

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So would you venture to say that your most exciting things growth-wise are the pickup in revenues from the state businesses of the new states and what's going on with Illinois and the JetX part? Those are the 2 highest growth areas of the company? Or is there something else that I'm not capturing in there?

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Diane Faro, JetPay Corporation - CEO & Director [46]

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Well, I think you're -- what -- I wouldn't say -- those are nice growth areas, of course, but also in our ISVs. Our ISOs are the ones that sell our JetX product. So the ISOs are the ones growing significantly with JetX, but we also are growing nicely, as I said, we have signed 24 partners. Significant amount of those partners are in the ISVs, and those integrated software vendors brings a different type of business to our market. So if you look at it, we always look at direct business, our ISO business, ISVs and the state, I think, all of them are growing at our expectations.

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Operator [47]

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And we do have a follow-up from Gary Prestopino with Barrington Research.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [48]

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Yes, I just want to just ask again about this whole issue with the Series A Preferred. I mean, is -- you guys are, I assume, negotiating with the board member now trying to come to a rectification of that. Do you -- or is this going to carry on till actually the time in October when there could be some issue on a forced conversion or anything like that?

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Peter B. Davidson, JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary [49]

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Hey, Gary, this is Pete. I think we have answered that as best we can at present. There is -- as we -- as Diane mentioned, there is no requirement that the preferred put there -- put it to us in October. They have the right but not the obligation to. And I think as Diane mentioned, we have 3 members of -- holders of the preferred who sit on our board. We have ongoing dialogue with them, and so we can't tell you today what the result is going to be. But as Diane mentioned, they have, as yet, given no indication that they're going to do anything different than keep on. That being said, we also have told you that we brought on 2 board members in the fourth quarter of last year to help us work to provide some sort of a long-term solution that would benefit all of the shareholders, and those discussions, I'm sure, continue to happen.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [50]

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Okay. Well, the only reason I mentioned it is because as board members, they are responsible in some way, shape or form for helping to enhance shareholder value, doing the right thing. And you guys have put together a couple of really good quarters here, but yet the stock keeps going down almost on a daily basis, and I think a lot of it has to do with the fact that this hasn't been rectified. So as board members, they have a responsibility to the shareholders. And I'm hoping they're listening. But it's hard with the way the stock keeps going down, given that you guys have put up such good numbers, to see this happening.

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Peter B. Davidson, JetPay Corporation - Vice-Chairman, Chief Administrative Officer & Corporate Secretary [51]

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Yes, I think, we all -- Gary, I think we all know and are aware. The board members are aware of all of those issues, which is why we are -- that's why we brought the board -- the additional board members on board to help us work through that, and that's happening. So I can't say anything more than that.

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Gary Frank Prestopino, Barrington Research Associates, Inc., Research Division - MD [52]

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No, I understand. I'm just saying on a conference call that they are responsible for protecting the shareholders, working with the shareholders. And at this point, at least on a short-term basis, they are not.

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Diane Faro, JetPay Corporation - CEO & Director [53]

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Gary, we hear you. And again, we are working on it, and we understand, but as we already mentioned, there's no indication of that.

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Operator [54]

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And I'm not showing any further questions at this time. I would now like to turn the call back over to Diane Faro, CEO, for any closing remarks.

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Diane Faro, JetPay Corporation - CEO & Director [55]

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Well, thank you, Ashley. And again, I -- thanks to everyone for joining this call. And we continue to look forward to speaking with you regarding third quarter results. We're excited about the company and the growth and where we're headed and look forward to talking to you again in third quarter. Thank you.

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Operator [56]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. And you may all disconnect. Everyone, have a wonderful day.