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spk00: Good day, ladies and gentlemen, and thank you all for joining us for this Quote Media 2022 Q3 results call. As a reminder, all phone participants are in a listen-only mode, and later you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your touchtone phone. You may withdraw yourself from the queue by pressing star and two. Please note that this call is being recorded, and I'll be standing by if you should need any assistance. It is now my pleasure to get us started with Mr. Brendan Hawkins. Please go ahead, sir.
spk01: Thank you. Thank you, everyone, for joining us today. We have a brief safe harbor, and 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 1985. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from forecasted results. With that said, I would like to turn the call over to Dave Schwarren, CEO of Quote Media.
spk02: Thanks, Brendan. Welcome, everybody, and thank you for joining us. We're pleased to announce that we have achieved a 15% increase in revenue in Q3 over Q3 of last year, and we're very happy with our growth this quarter. We did project that we would be a bit higher in the quarter, but the deviation of the Canadian dollar devaluation of the Canadian dollar had an impact on our top-line revenue. Fortunately, this does not affect our bottom line as our Canadian dollar revenue and expenses are almost equal. In any case, we are growing faster than ever and the announcements that we have closed major deals with two of Canada's largest banks certainly has been an eye-opener to the industry. Many more firms are now coming to us to discuss doing business with Quote Media. Q4 of this year and Q1 of next year are big rollout quarters for us. We'll be releasing new data products, launching new trading integrations, and taking some of these larger clients live. We're now head down for the rest of the year, working hard to meet all of our deadlines, and the pace of everything at Quote Media is certainly at a peak. This will be our best year, of course, but next year is already looking to be much better. We are very excited to see what the future holds. I'll now pass the mic to Keith Randall so he can take us through the numbers for the quarter, and then we can answer any questions that you may have.
spk03: Thanks, Dave, and welcome, everyone. I'll now start with the income statement. Note that all comparisons are on a year-over-year basis unless otherwise noted. Overall, we had another good quarter with a 15% increase in total revenue and a significant improvement in net income. Our new products continue to gain traction in the market, which has allowed us to attract some of the larger customers we've recently signed. Bringing down our revenue, our total closed stream revenue was relatively flat, decreasing by 1%. Corporate closed stream revenue increased by 3%, primarily due to the larger customers recently signed. Our individual closed stream revenue decreased by 10% due to a decrease in subscribers and the devaluation of the Canadian dollar. as approximately 50% of our individual cold stream revenue is earned in Canadian dollars. Interactive content revenue, which is web display content, increased 37%, mainly due to an increase in the size and number of our customer base, and in particular, the contracts signed with the large Canadian bank earlier this year. Our cost of revenue consists of fixed and variable stock exchange fees and other data costs. It also includes amortization of capitalized development costs, which accounted for the 3% increase in cost of revenue from the comparative quarter. Overall, our cost of revenue decreased as a percentage of sales, increasing our gross margin percentage to 52% from 47% in the comparative quarter. Improvement is mainly due to the higher gross margin associated with the contract signed with the large Canadian bank previously mentioned. Our total operating expenses increased 24% during the quarter. Most of the increase relates to improvements made to our infrastructure, security, and business continuity management, and in particular, the costs associated with obtaining SOC 2 Type 2 certification. SOC 2 certification provides independent assurance that an organization maintains a high level of information security and has controls in place to assure business continuity. We are currently in the final stages of obtaining certification and expect to complete the process before year end. Sales and marketing expenses increased 26% and development expenses increased 32%, primarily due to additional personnel hired to achieve our expansion objectives. DNA expenses increased 16%, primarily due to increased personnel costs and software expenses related to the SOC 2 certification process. Our net income for the quarter was $310,000 compared to $155,000 in the comparative quarter, an increase of $155,000. Our adjusted EBITDA was $670,000 compared to $540,000 in the comparative quarter, an improvement of $130,000. 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 $304,000 at quarter end, which was a $45,000 increase from year end. Our net cash flow from operations was $2.2 million, while net cash used in investing activities was $2.1 million due to increased spending on infrastructure and product development. Looking forward, we anticipate 16% revenue growth for fiscal 2022. As Dave mentioned, the Canadian dollar has depreciated significantly versus the U.S. dollar since Q2, which has reduced our Canadian dollar revenue when translated into U.S. dollars. This does not impact our bottom line, however, as Canadian dollar revenue and expenses are evenly matched. Looking ahead to 2023, we expect to maintain our current revenue growth and significantly improve our bottom line. This is based on customers already under contract, including the recently finalized contract with Bank of Montreal, which started in November. Thank you, and I'll now pass it back to Dave.
spk02: Thanks, Keith. Okay, so I think we're now happy to open up the call for any questions you may have for this quarter.
spk00: And we have a question coming from the line of Michael Kupinski.
spk04: Great. Thank you for taking the questions. Appreciate it. A couple of questions. How much did, if you can just give us a sense of the number of subscribers, whether in individual quote stream and corporate quote stream, what they have done? I know you mentioned that individual quote stream customers declined, but can you kind of give us a sense of the degree of the decline and then maybe talk a little bit about pricing, and has that been consistent, or have you been discounting, or just give us a sense of what that component has done?
spk03: I would say I don't have the numbers right at my fingertips, but I would say the subscribers decreased probably in the range of, say, 5%, and then the rest of the decrease was due to the exchange rate fluctuations. And you repeat the second part of that? I wasn't sure.
spk04: I was just wondering in terms of the pricing, has pricing been consistent or have you been discounting or can you give us a sense of what you're doing on the pricing?
spk03: Are you referring to individual quote streams specifically?
spk04: Specifically individual, yeah.
spk03: We haven't been discounting our pricing. We're actually reviewing our pricing. So we may come up with new pricing going forward, but we haven't changed any of our pricing yet. But we're looking at our exchange fees and maybe, you know, because I think we're below the market in that area. So there might be some areas of where we can increase our revenue in that area.
spk04: And Keith, if you were on a constant currency basis, what would have quarter been and what would have been your guide? Would you have hit your 20% growth target on the basis of what you have in terms of the currency exchange?
spk03: Yeah, we would have been probably around 19%, I want to say, 18, 19%. We had another customer who significantly reduced their exchange fees, but they were passed through exchange fees, so it really didn't impact our bottom line. So that accounted for a part, maybe not a percent, but half a percent maybe. So those two factors combined basically accounted for the difference of what we expected versus what we actually incurred.
spk04: Gotcha. How much of your total revenues are derived from Canadian sources?
spk03: It's about a third. That might go up a little bit in the future with some of the new contracts we've signed.
spk04: And those new contracts that you just recently signed, if I heard you correctly, you believe that they'll start making contribution in the first quarter or is it more second quarter events?
spk03: The Bank of Montreal starts in November.
spk04: Okay. But in terms of profit contributions, because there's a little bit of a ramp, right? Or do you anticipate?
spk03: This is, I mean, potentially there could be a ramp, but it's a fixed contract with potential for more, you know, above certain minimums.
spk04: Gotcha. And then if you can, Kind of give us a sense, you had mentioned that you expect margin improvement in 2023. Can you kind of give us a sense of what type of margin improvement you're expecting as you cycle into 2023? And hopefully, I assume that you're still anticipating to see 20% plus revenue growth, and I assume that you're going to get some margin benefit from just increasing size. But can you give us a sense of what you're anticipating margins to be?
spk03: I'm looking at about... 52% and then in 23 and improvement in probably 53% in 24. Okay. And then the revenue, I think we're going to be in that, you know, the 15 to 20%, it's somewhat dependent on the currency as well. So some of that's out of our control, even though it doesn't really impact our bottom line.
spk04: Aside from the one account that you mentioned that you saw the reduction in exchange fees, are you seeing anything related to this in economic headwinds that were faced here, inflation and prospect of a weakening economy, that sort of thing that you're seeing in terms of affecting any of your customers at this point? I know in the past, Dave, you had mentioned that that you feel like tough times would actually be a good thing for, quote, media because then, you know, people might be looking for cheaper alternatives and choose you. And so I was just wondering what your sense of the current environment and how that's playing out for you.
spk02: Yeah, no, that's exactly right. So I can comment on that, Keith. So because I am talking to clients and going through all of this on a daily basis, and sure enough, you know, with the economy and everything going, you know, rougher, they're always looking at their spend. And so this, you know, as Keith's saying about where companies are reducing their exchange fees, that means they're showing a lower level of real-time data maybe or a different exchange that's less, that has a lower exchange fee. So there's more of that in discussion trying to bring their costs down, but there's more companies coming to us to save money. So our net revenues find, the gross is kind of an exchange fee. If a company's spending $1,000 on exchange fee and they lower that to $500, that's all just flow through. So it doesn't affect our bottom line, but our top line might fluctuate because of that, but the bottom line doesn't. But many companies are coming to us to save money, and these two recent deals were also because of that.
spk03: Sorry, I was just going to add that we haven't seen any uptick in cancellations or anything.
spk04: Gotcha. And then the big issues are that, you know, how big is BMO? I mean, can you give us a sense of what the revenue contribution might be from them? No, I don't think we can disclose that, unfortunately. Okay. And then if you can kind of give us a sense of, you're saying that cancellations have not increased, so... With the 15% to 20% growth next year, you've obviously cycled through now one more of the larger accounts, and now with the BMO investor, what is baked into that 15% to 20% growth? Is it you're anticipating yet another client win, or is it just based on the current client wins that you have? I'm just trying to understand how, in terms of that guide, what what's baked in and what's not baked in?
spk03: Well, we had not just BMO, we've had other significant clients start with us or significant contracts start with us in the fourth quarter of this year. So that'll carry forward. So, I mean, I have factored in, you know, additional revenue growth, but nothing, you know, no significantly large contracts like the contracts that we signed this year. So, If we were to land a really large contract, like another Canadian bank, for instance, then, yeah, we would exceed our current guidance.
spk04: Gotcha. And then can you just give me an update on the number of salespeople that you have? I know that you were in a hiring mode and trying to hire additional people. Can you give me a sense of where you are today and then in terms of what your hiring plans might be?
spk02: Yeah, I mean, I think that we have nominal hiring in the sales area. I think we still have maybe 10 salespeople. I think some of the hiring was actually done on the technical side because of having a lot of workload to do for these bigger clients that was very specific and making sure that we hit tight deadlines. But yeah, I don't think that there's been a lot of sales hiring, but I think that's kind of one of our focuses for the next year. So I have to keep you posted on that one.
spk04: Great. Okay. Well, that's all I have. Congratulations on your quarter. Thank you. Thank you.
spk00: Well, gentlemen, we have no signals from the phones. I'll turn it back to you for any additional or closing remarks you have.
spk02: Okay. Thank you so much. Thanks, everybody, for joining us on this call. If you have any further questions, please feel free to reach out to Brendan Hopkins. His email address is bhopkins at quotemedia.com. And we're looking forward to the rest of this year and a successful next year. So thank you for joining the call. Goodbye, everybody.
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