Quorum Information Techs

Press star 1 again. Thank you. I would now like to turn the call over to Maureen Marks, President and CEO. Please go ahead.

Thank you, Sherelle. Hello, everybody, and thank you for attending Quorum Information Technologies Q3 2023 Results Conference Call and Concurrent Webcast today. Joining me on the call today is our Chief Financial Officer, Marilyn Bowne. Quorum is a North American software and services company providing essential enterprise solutions that automotive dealerships and original equipment manufacturers rely on for their operations. Through a combination of purposeful product investments and five strategic acquisitions in the last six years, including our latest acquisition of VIN on June 23rd, Quorum now has a uniquely integrated product suite of 13 essential software solutions that are used in whole or in part by 1,428 dealership customers across North America. Now with 13 of the 25 most common categories of software that dealerships utilize, Quorum is well positioned to develop, partner, or acquire products for the remaining 12 categories. Dealerships typically start with a single product from Quorum's product suite and experience increased synergy and value as additional Quorum solutions are deployed to their dealerships. Many of Quorum's customers only leverage one solution out of the 13 available Quorum solutions. The result is that Quorum has a $55 million annual SaaS revenue cross-selling opportunity across our existing customer base. That growth opportunity is approximately two times our $28.3 million SaaS annual reoccurring revenue run rate, and that is just within our current customer base. Today, at least one of Quorum's software solutions is installed in 40% of the franchise automotive dealerships in Canada. And in the past six years, Quorum has added 1,055 of the 1,428 unique rooftops we have today, primarily through acquisition combined with some organic growth. Moving on to our results for Q3 2023, Quorum posted total revenue of $10.4 million, a 6% increase over the same quarter last year. In Q3 2023, we also delivered a record 19% adjusted EBITDA margin up 2% from the 17% we achieved in the same quarter last year. As we continue to face a challenging economic environment that has slowed our revenue growth since Q2 2022, we have focused our attention on adjusted EBITDA margins. Our Q3 2023 record adjusted EBITDA margin improves the company's financial security and provides us the flexibility to start paying down some of our BDC capital debt. In fact, post Q3, on October 27, 2023, we made a prepayment of $1.6 million in principal and interest on our BDC Capital Loan Facility. We also continue to have access to $4 million in additional funding through the BDC Capital Facility for potential future acquisitions. Marilyn will now review our financial results in more detail, and I will follow with some additional comments. After our prepared remarks, we will open the floor to your questions. Marilyn, please go ahead.

Thank you, Maureen, and hello, everybody. Thank you for being here with us today. I would like to remind everyone that certain statements in this presentation are not at all forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors outside of management control that cause actual results to differ materially from those expressed in the forward-looking statements. CORP is not assuming responsibility for the accuracy and completeness of the forward-looking statements and does not undertake any obligations to publicly revise these forward-looking statements to reflect subsequent events or circumstances. For additional information on possible risks, please refer to our annual MD&A, dated December 31st, 2022, on the cedarplus.ca website. As Maureen mentioned, we continued a disciplined approach to profitability in Q3, 2023, delivering year-over-year increase of 15% for adjusted EBITDA and 13% for adjusted cash income or ACI. Additional highlights of our third quarter 2023 results are as follows. Total revenue increased by 6% to 10.4 million compared to 9.9 million in Q3 2022 and increased by 4% compared to 10 million in Q2 2023. SAS revenue increased by 1% to 7.1 million in Q3 2023 compared to 7 million in Q3 2022. BDC revenue increased by 6% to 2.8 million in Q3 2023 compared to 2.6 million in Q3 2022. Growth margin came in at 47% compared to 49% in Q3 2022, mainly due to an increase in services and one-time revenue which is lower gross margin revenue. SAS gross margin decreased slightly to 67% in Q3, 2023, as compared to 68% in Q3, 2022. CDC gross margin increased to 20% in Q3, 2023, as compared to 14% in Q3, 2022, and as compared to 12% in Q2, 2023, as Quorum continues to work on multiple initiatives to reduce the BDC cost structure. Adjusted EBITDA margin increased by 2% to 19% in Q3 2023, compared to 17% in Q3 2022. Adjusted EBITDA increased by 15% to 2 million in Q3 2023, compared to 1.7 million for Q3 2022. The increase in adjusted EBITDA is primarily attributable to an increase in growth margin and decreases in sales and marketing and general and administrative expenses offset by an increase in research and development expenses. Adjusted cash income for Q3 2023 increased by $0.1 million as compared to Q3 2022, primarily due to the increase in adjusted EBITDA. Including cash of $5.2 million, total net working capital as of September 30, 2023, decreased by $0.6 million as compared to December 31, 2022. This decrease is primarily due to an increase in contingent consideration related to the VIN acquisition. Decreases in prepaid expenses and loan receivable offset by an increase in accounts receivable. As Maureen mentioned earlier, on October 27, 2023, Quorum made a prepayment of $1.6 million in principal and interest on its BDC capital loan facility, which consisted of a $0.6 million prepayment on the mezzanine loan and a $1 million prepayment on the cash flow loan. As a result of this prepayment, the loan reduced its principal amount under the BDC capital facility by $1.5 million from $10.7 million to $9.2 million, resulting in $0.2 million in annual interest expense savings. With that, I'd like to pass it back to Maury.