Quotemedia Inc

Good day everyone and welcome to today's QuoteMedia Year-End Results Conference Call. It is now my pleasure to turn the conference over to Dave Schroren. Please go ahead.

Welcome everyone and thank you for joining us today. I have a brief safe harbor and we'll get started. Except for historical information contained herein, the statements in this conference call include forward-looking statements that are made pursuant to the safe harbor provisions in the Private Securities Litigation Reform Act of 1995. 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. And now we're happy to go through our 2024 year-end results. As we close out 2024, I'd like to reflect on the year and share where we stand as we head into 2025. 2024 was a challenging year in some respects and we ended the year with a modest decline, about 1% from the previous year. While that's not the growth we've historically delivered, we view this as a short-term pause, not a long-term trend. We finished the year with revenue just under 19 million. That slight dip was primarily due to client-side challenges where a few of our clients scaled back or ceased operations and others downgraded to lower-cost data alternatives. Importantly, this was not because of our services, it was more about their own internal shifts or challenges in their own businesses. That said, we responded quickly. We closed quite a number of new deals and expanded existing client contracts late in the year. And because of those Q4 signings, along with several new contracts already closed in Q1 of 2025, we've entered the year with real momentum. We are very pleased that we anticipate our Q1 2025 revenue to be our highest quarter in the company's history. Our current revenue run rate is approaching 5 million per quarter, which is 20 million annually, and we expect that revenue growth will continue improving as the year progresses. Our sales pipeline is very strong and we have many more large deals in the works, so 2025 is looking to be quite exciting. In addition, our deferred revenue is 2.4 million, which is a very encouraging sign. As a reminder, deferred revenue represents contracted work that we've already performed and collected payment for but has to be recognized in the future. We've also made excellent progress on the product front in 2024. New data solutions, as well as many new product and feature enhancements were launched and are on track to launch in the coming months and throughout the year. And we're confident these will create new revenue opportunities, both for us and for our clients. So while 2024 was flat from a growth perspective, it was also foundational. We've strengthened our client relationships, built up our future revenue pipeline, and set the stage for what we believe will be a very strong rebound in 2025. I'll now pass the mic over to Keith Randall to walk us through the financial details for the year, and then we'll be happy to take your questions.

Thank you, Dave, and welcome, everyone. I'll start with the income statement. Note that all comparisons are on a -over-year basis unless otherwise noted. We had a 1% decrease in total revenue for the year as all our revenue categories decreased by 1%. One of our larger customers reduced their spending with Pope Media, and another large customer was forced to discontinue services due to financial difficulties, offsetting the revenue from new clients added during the year. Our cost of revenue increased 7% for the year. Our cost of revenue consists of fixed and variable stock exchange fees and other data costs,

and amortization

of capitalized development costs. The increase is mainly due to increased amortization expense associated with the capitalized costs related to improving infrastructure, new product development, data collection, and the expansion of our global market coverage. Our gross margin percentage decreased from 51% to 47% as our cost of revenue increased while our revenue remained flat. Our total operating expenses increased 10% for the year. Sales and marketing expenses increased 7% due to additional sales personnel hired to support our product growth initiatives and salary increases for existing personnel. The increase was offset by the 2% depreciation of the Canadian dollar from the comparative period as most of our sales personnel are located in Canada. G&A expenses increased 9% primarily due to the $360,000 increase in bad debt expense. This is mainly due to a significant client discontinuing our services due to their financial struggles, which led to a loss of recurring revenue as well as a large bad debt write-off. Software development expenses increased by 15% primarily due to new personnel hired since the period to improve our infrastructure, security, and business continuity management. The increase in software development expenses was also due to a decrease in the percentage of total development costs capitalized in 2024 compared to the prior period. The increase in development personnel cost was offset by the 2% depreciation of the Canadian dollar from the comparative period as like our sales staff, our development personnel are mainly located in Canada. Our net loss for the year was $1.3 million compared to net income of $360,000 in the comparative year. Our net loss was due to our cost of sales increasing $600,000 during the year while our revenue remained relatively flat. Increased personnel costs and the increase in bad debt expense also contributed to our net loss. Our adjusted EBITDA was $1.8 million compared to $3 million in the comparative year, a decrease of $1.2 million. 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 $585,000 at year end, which was a $243,000 increase from our year end cash balance of $342,000. Our deferred revenue totaled $2.4 million at year end. The future costs associated with realizing that revenue is minimal as most of our deferred revenue relates to setup and development work already completed. Those setup and development fees have been deferred and will be recognized in future years over the service contract to which they relate. Our -to-date net cash flow from operations was $3.7 million while net cash used in investing activities was $3.4 million. Primarily due to spending on infrastructure and product development. Going forward, we're expecting to return to positive revenue growth in fiscal 2025. And as Dave mentioned earlier, based on sales that have already closed, we anticipate that revenue in Q1 2025 will be the highest in our company's history. We also reduced our development spending in late 2024 as some of our major development products are near completion. With improved revenue growth combined with cost control measures already implemented, we expect our bottom line to improve in 2025. Thank you. And I'll now pass it back to Dave.

Thanks, Keith. So we'll now open up the call for questions. If you have any questions, please let us know.

At this time, we will open the question and answer session. And our first question will come from Michael Kupinski with Noble Capital Markets.

Thank you. Good afternoon. Thanks for taking my questions. Dave, I was just wondering if in review of 2024, you stated in the past that you thought like a weak economic environment might be good for the company as businesses cut costs and maybe choose quote, media is cheaper or alternative. And in addition, you obviously invested in to enhance your go to market feature sets. And it didn't seem like that really excited revenue in 2024 either. What dynamics do you think are needed to improve the company's revenue trajectory? Let's say not just to show growth, but to really start to show double digit growth and really make a dent in capturing share for some of those much larger players in the industry?

Yeah. Well, that's a good question. I mean, I think if you take a look at what our sales pipeline is, which I review all the time with salespeople and the companies that we're talking to and presenting to, we're actually achieving that. So we did have a not a great year. We know that, but at the same time, the talks that are going on, the multimillion dollar contract discussions, the replacement of the, you know, the incumbent vendors, we're in the right place. The products that we've created, the newer technology that we're coming out with are comprehensive data sets. That's all proprietary to quote media. Everything that we're doing is actually positioning us really, really well. The meetings that I have with companies, they're very impressed. We can save them money. We can replace multiple vendors with one company. I think we replaced nine different vendors when we comprehensive with what we're doing. So I don't think that we're, we're not doing anything wrong. That's, that's my main message. We're doing things right. We've got very big companies coming to us wanting to move with us. It's tough. We're still a small company in a very big space going against multibillion dollar companies, but looking at our roadmap and looking at what we're doing and our sales pipeline, it's looking really good for this year. So I'm happy with where we're going and what we're doing. And I think we're going to be very impressed with 2025.

Thanks for that. Now I was wondering, can you give us a sense of the competitive landscape, that particularly, what do you, what do you see in terms of feature sets and things like that, that some of the larger players are offering? Are you competitive on the technology and on the sensitivity or, you know, increased competition there? Could you just give us a sense of the competitive landscape?

The competitive landscape hasn't changed a lot. Most of the smaller players have disappeared. So now it's mostly just big players and us. You know, we're not, we don't really go head to head with any of the smaller ones anymore. They don't really show up. This is very, very difficult business. It's an expensive business. It's very strict, you know, with our SOC 2 compliance and, and working with all the exchanges and the requirements and entitlement systems, everything. It's, it's, it's, it's a very difficult business to get into, very expensive to get into. And it's also, you know, not an easy thing to run. That's why we have quite the team to do all of this. So we've seen all the smaller companies kind of disappear. We're now going head with, you know, the big multi-billion dollar firms and we're at the table and we have companies that are actually, now that we've proven ourselves with, you know, getting some of the big banks and big brokerage firms and the nice client list that we've got now, some very substantial clients, they're now happy to go with us and to look at us and to evaluate what can we do for them. So I think we're, we're doing the right things. We've got the coverage, the data, we've got the product lines, we've got newer product lines. We're talking to some firms now to work very closely with them to use our product lines where they're actually building modules into our products. So there's, there's quite a bit happening. We're doing a lot in the trading area. So we're working with a lot of brokerage firms to enhance trading, doing multi-level options and strategies and trading ideas and all kinds of stuff. And then of course we're going deep into the AI world now. So there's a lot of things that we're doing with AI to improve on all the data and do all the work that a human does now AI can do to find the right strategies and the right stocks to trade and things like that.

Final question in terms of your sales staff, where are you on your sales staff and how do you think that you can ramp revenues? Or do you have sales staff needed? Do you think you have to add from here? What, what, what do you think that you need to do to really kind of get this going, you know, with revenues on a trajectory growing at a double digit rate?

Well, we did that last year. That was the unfortunate thing. I actually did add more people, more sales people. We added more, more work to start going to conferences and doing all of that. I don't know if anybody's part of LinkedIn and seeing what quote media is doing, but you know, every week it's like we're at this conference, that conference we're presenting, we're doing this and that. So towards the end of the year, we really ramped all of that up, added sales, added more, more marketing, really built out the marketing team and really went hard. And it's working. I mean, obviously with our Q1, it looks like we're going to have our biggest quarter ever. So things are going really well. I don't think we have to keep adding at this point right now, but I did, I kind of did that already. So now it's just proving it and going through pipeline. I mean, looking at our pipeline, it's a multimillion dollar pipeline of companies that we're talking to right now that have target dates of launch of end of this year and all kinds of stuff. So it's looking very, very good.

Do you find that there's any hesitancy from companies given the, you know, the noise in the geopolitical environment, tariffs and all sorts of things? Do you find that there is any hesitancy and do you feel like maybe that there are companies that are kind of waiting for the dust to settle to make commitments or you obviously indicated you're going to have a good quarter coming up, but in terms of maintaining that momentum and kind of going forward or maybe even showing a much more positive growth, do you feel like there's any of these issues that are affecting decisions at this point?

So far we haven't seen anything affecting decisions in that area. So the, you know, with all the tariffs and obviously with the shakeup in the world, I was waiting to hear something or have companies be affected, but I think in our industry, we're all just about the trading and markets and market data. And even when the market's crashing, you need to have access to it. You need to look at it. You need to trade. You need to prepare. So we're not seeing any changes in our industry as far as activity. It might even be more activity. We're kind of protected because when things are going well in the world, we're growing and selling data. And when things are going bad, we're still growing and selling data because people need it. Companies need it. And I guess my thought is always, you know, we can beat prices. We can come in lower. It's obviously difficult for some of these very large firms to discount certain companies, to close them, because if the word gets out that they're selling their product cheaper to somebody else, it goes bad, but we can come in and do that. So I'm hoping that there are companies, big companies, that want to that if we can get to the table and sit down with them, we can save them quite a bit, versus the incumbents that have been there for maybe 10, 15, 20 years, that we can replace those services.

Gotcha. Thanks. That's all I have. Good luck to you. Okay. Thanks.

And it appears we have no further questions at this time. I'll turn the conference back to Mr. Shoren for any additional or closing remarks.

Very quiet. I thought there would be a few more questions, but thank you, everybody, for joining us. As always, if you have any further questions, feel free to reach out to me. You can contact the email address investors at QuoteMedia.com. And I want to thank everybody for their support. Thanks for joining us today. And we appreciate your support and interest in QuoteMedia. Have a great day, everybody.