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spk03: Ladies and gentlemen, good day, and thank you all for joining us for this Quote Media first quarter 2021 results. At this time, all participants are in a listen-only mode, and later you will have the opportunity to ask questions. You may register to ask a question at any time by pressing the star and 1 on your touchtone phone. Please note, this call may be recorded. It is now my pleasure for opening remarks and introductions to turn today's program over to Mr. Brandon Hopkins. Please go ahead, sir.
spk01: Thank you. And thanks for joining us today. We have a brief safe harbor, and then we'll get started. Except for historical information contained herein, the statements in this conference call are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. With that said, I will turn the call over to Dave Schmorin, CEO of Quote Media.
spk04: Thanks, Brendan. Welcome, everybody, and thank you for joining us. We're pleased to announce that we achieved a 22% increase in revenue in Q1 over Q1 of last year. And as we discussed on our annual call last month, we had achieved a 10% growth in Q4. And in this recent Q1, we achieved an additional 10% revenue increase over Q4. Needless to say, we're very pleased that our trajectory is dramatically improving, and we are certainly excited to see what we can accomplish over the coming year. We've released several of our new products and data sets to clients, but we've not yet completed the full launch of quite a few of our new products. Over the coming months, we'll be releasing more of our new data sets and product lines such as our new stock charting system, our new QuoteStream web application, which is our HTML5 version of our QuoteStream application. We'll be launching our new company research reports, our new analytics, metrics, scoring products, and on and on. It's certainly going to be a busy year taking all of these new products to market. On the customer side, we're definitely seeing more large clients coming to us for proposals and price quotes. and we're seeing that our brand is building quite quickly in the industry. Many firms are approaching us to replace their incumbent data or application provider, and many are looking to move away from the larger firms either to save money or to switch off of antiquated quote systems. We're on track for a really good year, and we hope to keep everything ramping up as we continue to expand our market share. I'll now pass the mic to Keith Randall so he can take us through the numbers for the last quarter, and then we can answer any of your questions that you have.
spk05: Thank you, Dave, and welcome, everyone. I'll start with the income statement. Note that all comparisons are on a year-over-year basis unless otherwise noted. Overall, we had an outstanding quarter with excellent revenue growth. Our revenue increased 22% year-over-year and 10% from Q4 2022. Breaking down our revenue, our revenue growth was driven by a 42% increase in total quote stream revenue, and in particular, a 49% increase in corporate quote stream revenue. Additional data offerings and improved functionality have contributed to an increase in our average revenue per customer. We've also been able to take advantage of new opportunities arising from customers looking for a more cost-effective solution to their data and technology needs. Our individual coaching revenue was also strong, increasing by 28%. There was an increase in total users, which can be attributed to new marketing efforts, and more customers working remotely during the pandemic, a trend we see continuing. Interactive content revenue, which is web display content, increased 2%, mainly due to an increase in our average revenue per customer. The launch of new products and the expansion of our data coverage It allowed us to attract larger customers to replace the smaller customers lost due to the impact of COVID-19. Our cost of revenue consists of fixed and variable stock exchange fees and other data costs. It also includes amortization of capitalized development costs. Our cost of revenue increased 38% due to increased usage fees, vendor price increases, and expanded data coverage. As a result of our increased data costs and a changing revenue mix, our gross margin decreased from 49% to 43%. Our cold stream revenue has been growing at a higher rate than our interactive content revenue, which is higher gross margin. We expect our gross margins to improve in subsequent quarters, however, as our revenue catches up with the fixed costs associated with our new data offering. Vendor price increases typically occur at the start of each calendar year. We do not anticipate any significant vendor price increases for the remainder of 2021. Our total operating expenses increased 4% due to a 23% increase in sales and marketing expenses as we hired additional sales staff, resulting in increased personnel costs. DNA expenses decreased by 7% primarily due to a decrease in bad debt expense as the impact of COVID-19 diminishes. Our net income for the quarter was $23,000 and our adjusted EBITDA was $144,000. Our $133,000 PPP loans were given during the quarter, which was recorded in other income. Please refer to the reconciliation included in our press release for the calculation of adjusted EBITDA. Turning now to our balance sheet and cash flow statement, our cash totaled $815,000 at quarter end, which was a $397,000 increase from year end. Our net cash flow from operations was $936,000, while net cash used in investing activities was $530,000 due to the increased spending on infrastructure and product development. The circumstances dictate, however, we do have the flexibility to reduce development spending to maintain a strong balance sheet and liquidity position. Looking forward, because our revenue is recurring in nature, based on customers currently under contract, we expect to maintain or exceed our Q1 revenue growth for the remainder of 2021. Thank you, and I'll now pass it back to Dave. Thank you, Keith.
spk04: Okay, we're happy to open up the call for any questions that you have. And also, if you have future questions, please feel to reach out to Brendan Hopkins, bhopkins.quotemedia.com, and he can link us all together.
spk03: Very good. Thank you, gentlemen. We'll hear first today from Michael Kukupinski. Please go ahead.
spk02: Thank you. Thanks for taking my questions. So congratulations on seeing an acceleration in revenue growth. A couple of questions. On your corporate quote stream, is that related, the growth rate that you saw in the first quarter, how much of that was related to the additional product and feature sets that you might have and how much related to additional customers? And then maybe if there was any pricing in there that you might want to talk about as well.
spk04: I think mostly it was new customers. I don't think that there was a lot of increase with the new data. The new data is just being released and getting to certain customers now. So, yeah, it's just existing product and growth of the CodeStream product typically. Keith, do you have anything to add to that?
spk05: Yeah, it's basically new customers. I agree with that. It's also increased usage from existing customers as well, I would say, but not really price increases per se, but Mostly new customers and increased usage from existing customers.
spk02: And how much of the growth was related to new customers versus increased usage? Can you give us an idea, a flavor of where, you know, how much of that growth was coming from usage versus new customers?
spk05: I don't have the exact figure, but if I had to guess, I would say 80% new customers, well, maybe 85% new customers.
spk02: Okay. And then You indicated that you thought that I guess you're thinking for the full year that the full year is going to look very similar to the first quarter in terms of revenue growth, if I heard that right. But in terms of the mix, I would imagine you're going to have a different mix as you go forward. Certainly as you get to tougher comps in the Q4, I would imagine that corporate quotes may show slower growth. What are your thoughts? Can you just kind of give us a flavor of how we should look at the revenues by bucket, so to speak?
spk05: I mean, obviously it's hard to predict, but I see the revenue mix continuing on the trajectory it is right now. Dave, what's your thoughts on that?
spk04: Well, I guess the thing that we have to realize is that anything can change with sizes of customers, right? So we're doing a bunch of proposals now that are very, very large for, you know, for example, for QuoteStream, one for content solutions, one for, you know, feeds. And they're so dramatic that they can swing these numbers, you know, in a tremendous way. So I think what we're looking at is kind of standard clients and standard growth and standard progress. And it does seem like this trend is kind of continuing. I think our content solutions is going to pick up again. Content solutions was something that didn't increase because we lost. We had some content solutions customers that couldn't survive the COVID. And, you know, so we were recouping and adding more customers while some of those were kind of dropping off. But all of that seems to be changing now. And I foresee web content solutions increasing. But, you know, the difficulty is also the sizes of the deals when it's kind of, you know, your standard deals that come in. It's a little bit kind of like one pattern. And then all of a sudden something can come along that just dramatically changes that pattern. And so I think that's why it's hard to answer as well.
spk02: Gotcha. And if you could just talk a little bit about gross margins. Certainly, you indicated that gross margins are still somewhat constrained, I guess, if you want to use that term, because of the interactive content, which carries higher margins. It's not growing as rapidly as others that carry a little bit lower gross margin. What are your thoughts about gross margins for the year? How do you see that shaking out? I guess it really will depend upon how you think – usage is going to increase and then also how interactive content is going to improve. But what are your general thoughts about gross margins?
spk05: I see them improving during the year. As I mentioned, a lot of our vendor price increases happen at the beginning of the year. So as our revenue grows, we start to recoup some of those costs, which improves the margin. But also we've added new data, like it has six cost and some of the stock exchanges have added new fixed costs as well. So that typically happens at the beginning of the year. So as our revenue grows during the year, I'm forecasting that our gross margins will improve. Now, again, obviously that's subject to our revenue mix as well, but everything being equal, I do see our margins improving during the year.
spk02: But as you – margins improving from first quarter, but not from year over year 2020. I would imagine the gross margin is going to still be below 2020. Is that right? Yeah, that's correct.
spk05: Gotcha. Again, you know, subject to a large new contract that, like Dave mentioned, that skews things. Yep, as always, right?
spk02: All right. That's really – at this point, too, I know that in the past you've kind of explored the prospect of looking at acquisitions to maybe to buy certain feature sets, buy certain data feeds and so forth. What are your thoughts on acquisitions at this point? Anything that you want to talk about?
spk04: Yeah, nothing at this point. I think that we're still stat quo moving forward and probably just address it again and look at it, you know, maybe next quarter and take a look at where we're at and what we want to do. We want to start banking some cash and then planning for the future of that.
spk02: Gotcha. All right. Thanks, everyone. Appreciate it.
spk03: Thank you. Thank you, sir. Our next question today comes from the line of David Houchin. Your line is open. Please go ahead.
spk06: All right. Thank you, Matt Richard. But I just have a question. You guys don't seem to announce very much. Would it be possible that in order to keep us shareholders are kind of up to date. When you do get a contract, a substantial contract, you would make an announcement.
spk04: Yeah, thanks, Richard. It's true that we don't announce as much as we would like to. And I think we've discussed this on many calls. The issue, of course, we run into is the larger the client, the larger they don't want to tell the world that they've switched their data provider away from one of the bigger firms. And they don't want to announce that. So typically we get denied on a lot of press releases, and they might say things like, well, you can announce that you've done a deal, but you can't say our name, you can't refer to us, you can't do anything. So then it's kind of like, well, we look at a press release and we say, well, that's going to look kind of stupid. So we don't do it. But, and then, you know, obviously we're doing deals all the time, but they're, you know, they're not ones that sometimes we think, okay, we can announce that. But some of them are just your basic deals. And is it worth announcing those all the time and spending the money to announce and all of that? But I hear you and we want to announce more as we do things. And, you know, it's probably one of our policies as we move forward is to try to get more press releases out when we put out new data sets or new product lines or even groups of clients maybe rather than the single one-offs. But we'll see what we can do this year to do more announcing. But again, it always comes down to that customer and does the customer want to publicize that it's a secret of where they get their data.
spk03: Okay, fair enough. We'll take our next question from Dean Averami.
spk05: My question was answered.
spk03: Thank you. Thank you, sir. Next, we'll hear from Colin Gilbert.
spk00: David, congratulations on the job well done for first quarter. I was wondering, as we become more transparent in the data field, if you've been getting any bites from bottom feeders for possible merger and acquisitions, Have you been getting any interest in who is this new company that seems to be doing quite well? Yeah.
spk04: Well, we get bites all the time, and bottom feeders aren't really the right companies that we're looking for. But as we're growing and as we are getting very well known, yeah, there's more and more firms that are contacting us to discuss the possibility of of merging, acquiring, you know, just getting into those discussions. And I think that's going to happen more and more throughout the year as, you know, we've got good numbers, we've got good growth, everything's looking really good. And our name's getting out there, you know, our brand is really getting recognized and we are becoming one of those top tier players. And, you know, our competition is, you know, they're all multi-billion dollar firms. So it's quite obvious that we're kind of like that next company in line to to have some pretty good success. So, yeah, we are, every once in a while, people want to talk, and we talk, and if it's something that we want to address further, we will. We're just kind of working through, but thanks for your question. Thank you. Continue the good work. Thank you.
spk03: And gentlemen, at this time, we have no further signals from our telephone audience.
spk04: Okay. Well, thanks, everyone, and Thanks for being on the call. We'll talk to you in a few months, and hopefully we have some good news again. And if anybody has further questions, please feel free to reach out to Brendan Hopkins, who can link you up to me or Keith or whoever. And it's bhopkins at QuoteMedia.com is his email address. Thanks, everybody, and have a great day.
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