Quotemedia Inc

Good day, everyone, and welcome to the Quote Media year-end results conference call. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session. You may register to ask a question at any time by pressing star 1 on your phone. Please note, today's call is being recorded, and I'll be standing by should you need assistance. Now, I'll turn the call over to your host, Dave Swarn. Please go ahead, Dave.

Thank you, and welcome, everyone. We appreciate you joining us today. Before we begin, I have a brief safe harbor statement. Except for historical information contained herein, the statements made in this call include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. And now we're happy to go through our 2025 year end results. Sorry, 2025 was a very strong year for Colbedia. At the beginning of the year, we were focused on rebuilding from the client losses we experienced in 2024. Today, I'm pleased to say that we have not only recovered, but we have moved beyond that period and established a stronger, more diversified foundation for the business. For the full year, we achieved 8% revenue growth over 2024. This is a meaningful result, particularly given the headwinds we were working through at the start of the year. As the year progressed, we saw growth accelerate quarter by quarter, supported by new client wins and expansion within our existing client base. This acceleration is reflected in our fourth quarter results where we delivered a 14% increase compared to Q4 of 2024. Importantly, this growth is high quality and increasingly predictable. We are signing larger contracts, expanding relationships with existing clients, and continuing to build a stronger base of recurring revenue. Our sales pipeline remains very strong, arguably the strongest we've seen in several years, and we are entering 2026 with a high level of confidence. Based on our current visibility, we expect to deliver double-digit growth through each quarter of 2026. From a profitability standpoint, we continue to see steady improvement. Our gross margin finished the year at 47%, and we expect that to improve further through 2026. The same is true for EBITDA and overall profitability, which we expect to strengthen in the coming quarters as the impact of previously capitalized development costs continues to diminish. We're now seeing the benefits of the investments we made over the past several years. And as revenue continues to grow, we expect that to translate into improved profitability. This reflects in the operating leverage in our business. As revenue grows, our cost structure does not increase at the same rate, allowing us to expand margins over time. In addition, our deferred revenue finished the year at $1.9 million, which reflects strong contracted business that will be recognized in future periods and provides greater visibility into our revenue going forward. From a competitive standpoint, we're very encouraged by what we're seeing in the market. We are consistently winning contracts against much larger, well-established competitors. Importantly, these wins are not based on price. They are based on the strength of our product, the depth and quality of our proprietary data, and the level of service we provide to our clients. We are winning because we are better, not because we are cheaper. That is the clear validation of our strategy, and our long-term investments in both technology and data. We are also continuing to expand our product offerings. Our AI initiatives, which we began developing internally several years ago, are now becoming increasingly integrated across our platforms. We believe this will enhance the value we deliver to clients and create additional opportunities for growth over time. We see AI as a meaningful driver of future product value and client engagement. We're entering 2026 with more visibility than we've had in years. Our pipeline today gives us real confidence, not just optimism about the year ahead. Our products are resonating in the market and we are increasingly seeing companies reach out to us to upgrade their services from incumbent vendors. With the momentum we've built this year, we believe we are at the beginning of a multi-year growth phase. Our business is becoming more predictable, more scalable, and more resilient. And we are entering 2026 from a position of strength. We are very excited about the opportunities ahead of us. With that, I'll now pass over to Keith Randall to walk us through the financial details for the year. And after that, we'll be happy to take your questions. Go ahead, Keith.

Thank you, Dave, and welcome, everyone. I'll begin with the income statement. Unless otherwise noted, all comparisons are on a year-over-year basis. Total revenue increased 8% compared to fiscal 2024, with Q4 revenue up 14% versus Q4 2024. Corporate coaching revenue grew 14%. while interactive content revenue increased 5%. Growth was driven primarily by higher average revenue per customer, reflecting our continued success in attracting larger clients and expanding relationships through cross-selling. Individual cool stream revenue is relatively unchanged from 2024. Cost of revenue includes stock exchange fees, data costs, and amortization of capitalized development. Cost of revenue increased by 9%, driven by higher variable exchange fees associated with revenue growth, as well as increased in fixed stock exchange fees. Gross margin remains stable at 47%. Looking ahead, we expect gross margin to improve as revenue grows and amortization expense declines with lower capitalization levels. Total operating expenses increased 14% for the year, primarily reflecting lower capitalization of development costs and therefore higher immediate expense recognition. Sales and marketing expenses were relatively flat, increasing 1%. G&A expenses decreased 12% driven by lower bad debt expense and reduced office costs. We downsized our Vancouver office after our lease ended in July 2025, as most of our development team now works remotely. Software development expenses increased 58%, reflecting a shift in the capitalization of development costs, with 7% of development costs capitalized this year, compared to 25% in 2024. This increase was partially offset by lower payroll costs reflecting a reduction in development staff in December 2024. Net loss for the year was 2.3 million compared to 1.3 million in 2024. Adjusted EBITDA was 1 million down from 1.8 million. Lower capitalization resulted in more development costs being expensed immediately while amortization remains elevated due to prior period investments. While our capitalized development cost accounting impacted earnings and EBITDA, it did not impact cash flow. These dynamics are temporary and will normalize over time. As a result, we expect improvements in gross margin, EBITDA, and overall profitability as revenue continues to grow and amortization expense declines. Please refer to the reconciliation in our press release for details on adjusted EBITDA. Turning to the balance sheet and cash flow, we ended the year with $320,000 in cash compared to $585,000 at the end of 2024. Deferred revenue totaled $1.9 million. The associated future costs related to deferred revenue are minimal, as this revenue largely relates to setup and development work already completed and will be recognized over the remaining contract terms. Net cash flow from operations was 1.1 million, while investing activities used 1.4 million, primarily for infrastructure and product development. Q4 revenue growth was 14%, and we expect similar growth in 2026. We also expect improvement in profitability as revenue grows and the impact of prior period amortization diminishes. Thank you, and I'll pass it back to Dave.

Thank you, Keith. We'll now open up the call for questions, so please let us know if you have any questions. And as always, if you have any follow-up questions, please feel free to reach out to us at investors at QuoteMedia.com. So, open to questions.

Yes, if you'd like to ask a question, please press star 1 on your phone now, and you'll be placed into the queue and the order received. Again, everyone, star 1 for a question, and we'll pause briefly to form the queue. First question today comes from Michael Kapinski of Noble Capital Markets. Please go ahead.

Thank you, and first of all, congratulations on a nice quarter, great print. Just a couple of quick questions here. How much of your expected 2026 revenue is already under contract? And then how does that compare to prior years? If you can just kind of give us some flavor there.

Go ahead. Yeah. Just give me a second here. Yeah. I think based on, I did this math just based on our, we just extrapolated our January revenue. We would have a, about $2 million in revenue growth yearly. So that would give you an indication of how much is already under contract.

Gotcha.

If you annualize it, it'll be around, it would be about $22 million, I believe, annualized.

Okay. Perfect. Thanks, Keith. And then how should we think about software development costs going forward? I know it was $2 million in the Q4, is that a good run rate as we go into 2026? Or was there some... You could just give us some thoughts about that.

You're referring to the amount we're capitalizing?

Yeah.

I would expect it to go down a little bit further, but not that much further. For being more... Partly it's being more conservative of what we capitalize as well. Because we were also running into problems, not problems, but the more we capitalize, the harder it is for auditors to audit as well. So that was becoming a problem. We're spending too much time tracking it versus actually developing. So that was a factor as well.

Gotcha. And then, Dave, you mentioned a little bit about the competitive dynamics in the marketplace today. I was just wondering if you could just talk a little bit about the current market environment, particularly as you compete against those larger market data providers. What is the big draw for the company? I know that you said it's not on the basis of price, of course, but what is the feature set that really is attracting the growth right now?

Well, I think, you know, over time, obviously, we've established our name and our brand in the market. We've got some very big clients. You know, we're being called to the table every time there's an RFP or a request of some sort. We're invited to quote on it. And we're noticing that, you know, we're not having to go in bottom. Sometimes we're actually even higher priced. But what we found is our products are better. Our data is our own. It's all proprietary. So we're not dependent on any of these third parties. Any other providers out there usually, you know, smaller guys usually are using third parties for their data. We're not using any third parties where we own everything ourselves. So the power that we have is, you know, to be able to price things the way we need to, but at the same time, Our service and our product levels, we are hearing that they're better. So our technical charting is much better than competition. You're going to see our technical chart hitting many sites and high-end firms. They're all going with our technical chart as an example. So just things like that. We're very focused on higher-level product. It's all more modern. It's... We're just more nimble to work with and also our service levels. We just hear that our service levels are great. People get white glove treatment. We're there for them. If they need other data, if they need other services or other methods of delivery or anything like that, we're there. And they don't have to deal with lots of legal and back and forth. It's much more straightforward with COVID-19. So anyways, I guess the main thing is that the bigger contracts are coming our way, which is great.

Gotcha. And just final question. How are you thinking about investment versus profitability trade-offs at this stage of growth, particularly as you indicated that you're anticipating double-digit revenue growth going forward here and hopeful for multi-years, you indicated? Can you just kind of give us some thoughts about what your thoughts are in terms of investments and and needed to kind of sustain that type of, you know, strong revenue growth. And then, you know, just your thoughts on the profitability trade-offs.

Sure. Yeah. I mean, it's not like we need to spend a lot more. So, I don't really have a target of where I'm going to be spending. We do have very, very good teams. You know, I think it's just head down, keep going with what we've got. We don't really need more people. If we bring in, you know, a whole bunch of big clients all at the same time, then we might need some more implementation or front end people just to keep up with it. But that's about it. I mean, everything else is ticking along. We've got a pretty substantial sized company of people. Every team has redundancy, failover, everything that we need. The only thing is I might look at some international expansion. I have been focusing on that, knowing that we are going to have some profitability and some extra cash as we go forward. So it's kind of looking at some of the other countries that I want to take us into. But I'm not jumping at that yet. And then the other thing is, you know, maybe looking at some share buyback if we have extra profitability.

And then Dave, you mentioned in the past, I'm sorry, one more. You mentioned in the past the prospect for strategic partnerships and things like that. Would your international expansion be more interesting to you to bring in the strategic partner, or are you looking at M&A, or any thoughts there?

Yeah, looking at both. So I've actually spent the last few months doing that exactly. So partnership discussions as well as M&A discussions. But it's a little premature. So I'm just kind of feeling it out. I'm talking to people in the industries in those countries to find out what's needed, where the incumbents are, where people are not happy, and what we would focus on. The nice thing about QuoteMedia is we already have all the product. We already have all the delivery. We already have the best terminals in the market. You take a look at our QuoteStream web product, which is fantastic. way above everything that's out there. All we have to do is turn on data, really. But, you know, there's obviously some fees and exchange fees and things like that. But we're ready to run. So that's what's kind of great about what we're doing.

Great. Thank you. That's all I have. Thank you.

Okay. Thank you.

Next, we'll hear from Eric Nickerson of Third Century Partners.

Hi, guys. Just a question about your taxes. The software development expenditures that used to be amortized over three years but are now amortized in one year, do the tax laws match that? Do you get to write them off on your taxes in one year as well as live? I've seen you had to write them off over three years previously. Are you able to write them off in one year now?

Yeah, I can answer that. Unfortunately, it's different for foreign development. So that is 15 years, which is problematic for us, right? So that's another reason why we want to reduce the capitalized development. So yeah, that's... So to answer your question, unfortunately, any foreign development is treated differently for tax. And we have a team in India and Canada, obviously.

Okay, well, I was more thinking about the mainstream domestic development.

Yeah. Do you get the same tax treatment going forward? You're correct about the domestic, but I'm just saying that we also have foreign development, so. which is the tax treatment is different for foreign development.

Okay, good. Thanks. That's all I have.

All right. Next, we have investor Ankur Sagar.

Yeah, hi. Good afternoon, Dave and Keith. Thank you for taking my questions. Congratulations on a great Q4, and congratulations you know, back to growth in 25. I joined late, so, you know, I apologize if you have already, you know, talked about this, but I have two questions. One is, you know, regarding the growth trajectory. I mean, how do you feel about it? I mean, Q4, you know, 14% growth overall in a 25 and 8% growth. Based on the pipeline, do you think these sort of numbers of 14% growth can continue?

Yeah. Yeah, exactly. That's what we're kind of looking at. You know, we look at our projections. We look at going forward. And it looks, you know, that looks like what we're looking at. But there's also so many big things in the works that anything can happen. So we're very confident with the double-digit growth, you know, every quarter. And it's more about, you know, what's going to kick in that really, you know, changes that number even more. But, yeah, there's your answer. Okay.

And then one on the, you know, valuation question, Dave. I mean, you know, the company is back to growth. I mean, 14% growth. And you expect that trend to continue. You know, the valuation of the company does not really reflect that. And, you know, there is a couple of fundamental ways to fix that. I mean, one, you know, I think you just talked about doing a share buyback. And the second is to, you know, consider other strategic alternatives like a sale of a company, which I know a private market valuation for this company would be higher. So, any thoughts on how, you know, what sort of tools you're thinking about to really fix this valuation gap?

Yeah, I mean, I think that was asked, you know, last quarter as well, if I'm going to start focusing on IR. I mean, obviously, my primary focus has been revenue, meeting with clients, you know, traveling for that, and not really doing a lot of IR. But it's also because I found that IR was not helpful if you didn't have a story, right? If you had a bad year, if you were not doing great, you know, whatever happened, it's the wrong time. And you just waste money. You waste money and time and you go and you talk to people and nothing really happens. And people are always show me, don't tell me kind of thing. So now we've done it. We've pulled out of that. You know, I'm seeing really good growth. The clients that we're proposing to now are way bigger. Everything's going really, really well. So it's time to put some focus on IR, get some meetings going that way, go to some of those conferences, and then tell our story again. And I think that's going to help. And, yeah, I just – I guess we're so – We're quiet. There's reasons why we're quiet in the industry. We can't press release a lot of things. And there's many reasons and there's many clients that will not allow it. It's a very strange industry that way. But we're, you know, I just, it's getting the word out there. We just have to get more eyeballs on the company. But I think the growth and the recurring growth, double-digit growth numbers, I think are going to start to spark some interest in the company. I'm hoping, for sure.

Okay. And how is the company, you know, using AI sort of like, are you using tools to really, you know, increase the profitability or, you know, sort of like create more products or anything like that? Oh, yeah.

Well, AI is a phenomenal thing. So, I'm the biggest advocate of AI, forcing it, almost forcing it down everybody's throat because I've used AI for many years. And the company now is completely wrapped around AI. So, every single department has high-level AI access. We are using it for coding. We are using it for data cleansing. We are using it for analytics. We are using it to analyze support tickets to see what the trends are. We are doing so much internally as well as all of our external products have AI. So we're doing a lot of AI there. We're releasing, we're meeting with a lot of these big firms about AI because they've got a focus on AI and they are obviously linked to us. So we have to do all the development. So we're showing them all of our products that we're building and what we're doing. It's about perfecting and it's about making sure that AI doesn't make mistakes or, you know, all those things that people are scared of. So all of our big clients want to move with the AI. The thing is that we, you know, you're probably going to see a bit of a delay as far as our open chat product. You know, we've already written it. Our bot is called Q, and it's an amazing bot. Basically, it only uses quote media data, so it does not go to the web. It goes through, it uses all of our data calls, all of our database, and it answers all your questions. It analyzes your portfolio. It tells you how a stock's doing. It tells you history. It compares stocks. It does whatever, you know, it's like chat GPT. And we are using all of these third-party AI agents. So, they do take credits. They do cost money. I mean, obviously, it's going to be flow through to clients, but that's where you get the high level. And we're not exposing our information into the general AI world. So it's not going into chat GPT for the world. It's only in our own use, that type of thing, right? Yeah, anyways, AI has been huge for us, absolutely massive.

The chatbot product, I mean, are you creating that internally or is that for a client where you plan to white label it?

Oh, yeah. It's for white labeling. It's for use in our terminals. All of that. Yeah. It's available for clients. And we've demoed it to clients. We've demoed it. It's a phenomenal product. And it's always a work in progress, right? It's training. It's teaching. It's making sure that it's not going sideways or doing something wrong. And that's where clients are, you know, want to make sure. Like, You know, you're not going to have a big bank turn on a chatbot and all of a sudden it tells somebody something it shouldn't. So I think that's where our other AI products, which is analytics, trading ideas, showing you trends, showing you, you know, what using all these different strategies. You know, if you're a strategy style investor, these are all the things that AI is finding and you don't have to find it. And I think that's where our focus is. Analyzing your portfolio, showing you if your portfolio is incorrectly weighted or if it's changed since yesterday because a mutual fund or an ETF has bought into different stocks and now you're heavy in a certain sector and you shouldn't be. Different things like that, right? So it's It's pretty involved, but the amount that AI can do is, it's crazy. It's absolutely insane. And we're jumping all over it. And we have for years.

Got it. Just one last one on the, I think last quarter you mentioned, you know, some large sort of like deals. Have any of those closed recently or, you know, and in general, how does the pipeline look?

Pipeline looks great. Yeah. Yeah. So we have had closure. We have had some good deals closing, as you can see by our growth numbers. But some of the bigger ones are actually still going. So I was thinking something would close by now on one of those big ones that we're talking to, but it looks like it might be in the next quarter. But, yeah, we're doing well. I mean, the pipeline is very big. RFPs are – coming in like crazy. We're starting to build that real brand, that real name. And the more we can get our products onto external sites, I think that's the other thing. We kind of do everything behind login so you don't see it all. So now we're doing some focus on those portals and external sites so you can see Quote Media's brand and name and a little bit more in the limelight.

Got it. Just one more. As we just look at the market, there has been a scare in the market that with this AI trend, software and SaaS is dead, where companies should be able to create their own software. From what you are telling, you see AI as a tailwind, but how are the, you know, what do you see inside the customer base that you work with? I mean, you know, are they sort of like looking at using AI to replace vendors or, you know, what is that conversation, you know, with the customer base and your thoughts on it?

Actually the opposite. So I haven't seen that at all. It's not like you can just, create with AI and it's all the data and the analytics behind the scenes. So what they're doing is, you know, all of these companies are starting an AI department. You know, we've had an AI department for a while and it's essentially focusing on what do we do with AI and where do we go with AI and every single team member can talk to the AI department to say, I need to do this. Or I have an idea for improving this or that. How do we use AI? So it's making sure AI is being used across the board for everything. These companies are creating AI departments, but it's more to figure out what AI they're going to use and how they're going to improve their product line. And then they reach out to us to say, what are you doing and how do we use you? Like, they don't want to build it. They don't want a chatbot. They don't want to build analytics and portfolio things, you know, all that stuff. They want us to do it. So they're more about the AI strategy of their firm and then coming to us. And so we're filling out constant questionnaires from all these companies of, you know, what kind of AI are you using? What can you provide us? What kind of safety nets do you have? All these kind of questions that are coming into us because they want us to provide. That's what we're seeing. Got it.

Okay. Thank you, Dave. Thank you for taking my questions.

Yeah, you bet.

Once again, everyone, press star 1 for a question. Dave, we have no further questions at this time. Back over to you for any additional or closing comments.

Okay. Well, thank you, everybody. Thanks for joining us today, and we appreciate your continued support, obviously, and interest in Quote Media. Tell your friends. And as always, if you have any follow-up questions, please feel free to reach out to us at investors at QuoteMedia.com. We really appreciate it. Thanks again, and we wish you a great rest of your day. Bye-bye.

That concludes our meeting today. You may now disconnect.