ShiftPixy, Inc.

Fiscal Q3 gross billings were $94 million, up 57% year over year and 14% sequentially. Average worksite employees were 10,860, up 50% year over year and 12% sequentially. Gross profit was $2.7 million versus $1.5 million a year ago, with gross margin of 19% versus 17% last year. Net loss per diluted share was $0.15 compared with a net loss per diluted share of $0.06 in the prior-year quarter. Cash at the end of May was approximately $2.9 million versus $1.6 million at the start of the fiscal year. Looking ahead, management said it expects cash flow breakeven toward the end of fiscal Q1 2020, and said 17 new clients since the end of May added about 6,000 worksite employees and roughly $29 million in annual revenue.

Scott Absher framed the quarter as part of a broader inflection point, emphasizing growing adoption of the platform and saying the company is moving from building critical mass to activating more robust platform functionality. He highlighted the self-delivery offering as a timely extension for restaurant clients and said it was getting a strong reception. He also defended the decision to stop honoring convertible redemption requests and linked that move, along with the share repurchase program, to a desire to support the stock and better reflect operating progress.

Patrice Launay focused on the company’s operating leverage and liquidity. She cited gross billings of $94 million, gross profit of $2.7 million, gross margin of 19%, and cash of approximately $2.9 million at the end of May. She said the company is burning about $2 million per quarter, or slightly less than $700,000 per month, expects additional cash flow from client and employee growth, and reiterated breakeven by the end of fiscal Q1 2020. She also noted operating expense should rise as ShiftPixy builds an internal software development team and adds licensing costs tied to the self-delivery solution.

Analyst questions centered on the voluntary default on convertible notes, the NASDAQ listing warning, and how the share buyback would work. Management said it is negotiating with convert holders and believes ceasing the conversions and repurchasing shares could help support the stock above the $1 listing threshold. Other questions covered contract renewals, advertising strategy, app download counts, and competition; management said contracts are 12-month auto-renewing, the app download counter reset after a version 2.0 launch, and the company sees itself as a first mover with no direct competitor using the same strategy and technology stack.