Quotemedia Inc

Good day, everyone, and welcome to today's Quote Media Q2 Results conference call. At this time, all participants are in a listen-only mode. 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 1 on your telephone keypad. Please note this call is being recorded, and I'll be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Dave Schorn. Please go ahead.

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 with that, we're happy to go through our second quarter 2026 results. Overall, we're very pleased with the progress we made this quarter. Last quarter, I talked about Comedia entering a new phase of scalable growth, and I think what we're seeing now is some real evidence of that happening. One of the things that we're most excited about is the progress we're making with larger enterprise clients. We recently signed a significant multi-year agreement with a large enterprise customer for a comprehensive market data and research solutions. And we're also in the final stages of completing another multi-year enterprise agreement. What's particularly exciting about these opportunities is that in both cases, we were selected to replace much larger incumbent providers. We've talked before about competing with some of these biggest companies in our industry. and now we're increasingly seeing that when these customers really evaluate the alternatives, QuoteMedia can compete extremely well. We believe there's a few reasons for that. We've spent many years building a very comprehensive financial data set. This gives us tremendous flexibility in how we deliver and integrate our data for customers and we combine that with level of service that can be difficult for much larger organizations to match. We think those are some of the things that really differentiate QuoteMedia, and we're increasingly seeing that reflected in the size and quality of the opportunities we're winning. We're moving further upmarket. The opportunities we're competing for are getting larger, and the relationships we're building with customers are becoming broader and more strategic. Another area we're very excited about is artificial intelligence. Last quarter, I talked a little about how we're using AI internally and we're using it across data cleansing and monitoring, quality assurance, software development and a number of other areas. That work continues and we're seeing real productivity benefits from it. But I think the more exciting story going forward is what AI means for our products and for our customers. We've already released new AI related capabilities and we have quite a bit more coming throughout the year. We're working on AI-generated market intelligence, enhanced screening capabilities, trading ideas, portfolio analysis, education, and conversational tools that allow users to ask questions and interact more naturally with our financial data. We think AI is going to change how people consume and analyze financial information, and we want Colt Media to be at the forefront of that change. There's also another side to the AI opportunity, and I think it's very interesting for us. Every company developing AI applications around financial markets needs data, and not just a small amount of data. They need comprehensive, accurate, reliable, and well-structured financial data that their systems can actually use. That's something Quote Media has spent many years creating. We're already seeing companies come to us specifically because they need our data for their own AI initiatives. So we think we're in a very interesting position. We can build our own AI products and integrate AI throughout the Quo Media platform, but we can also provide the underlying financial data that these companies need to build their own AI products. We think both sides of that opportunity could become increasingly important for us. Turning briefly to the quarter itself, the financial results also continue to show scalability we've been talking about. Revenue increased 11% year over year, with particularly strong growth in interactive content and continued growth in our quote stream product line. At the same time, our gross margin improved to 50% compared to 46% in the prior year period. I think that's important. One of the advantages of our business is that as we add revenue, particularly from larger enterprise customers, our costs don't grow at the same rate. We are starting to see more of that operating leverage come through our numbers. Adjusted EBITDA also improved substantially compared to the same quarter last year. Keith will go through the financial results in more details, including the impact that development costs accounting, and amortization continue to have on our reported earnings. But when I look at the business overall, I think the direction is very encouraging. We're growing revenue at a double-digit rate, we're improving margins, we're winning larger enterprise customers and we're continuing to develop new products and capabilities that can create additional opportunities for us going forward. Our sales pipeline also remains very strong. The significant contracts that we're adding are growing multi-year relationships, which gives us additional visibility into future revenue. And based on the business we currently have under contract, we continue to expect double-digit revenue growth throughout the remainder of 2026. At the same time, I think there's a bigger story developing here. We have spent many years building out our data, our technology, and our infrastructure, and we're now at the point where we can compete for opportunities that historically would have gone almost and many more.

Thank you, Dave, and welcome, everyone. In reviewing the financial results for Q2, unless otherwise stated, all comparisons are on a year-over-year basis relative to the second quarter of 2025. Our momentum continued this quarter with revenue increasing 11%. This growth was primarily driven by a 14% increase in interactive content revenue and a 9% increase in corporate quote stream revenue. These results reflect success in both acquiring new customers and expanding our footprint with existing accounts, especially among our larger enterprise clients. Shifting to our retail segment, individual cool stream revenue remained relatively stable, decreasing slightly by 2% compared to the comparative period. Turning to our cost of revenue, total cost of revenue, which includes stock exchange fees, data costs and amortization of capitalized development increased by 2%. This modest increase was driven by higher data storage fees to support our growing customer base, which was partially offset by lower amortization expenses related to historical development costs. As a result of our revenue growth outpacing our cost structure, Gross margin improved significantly to 50% in the quarter, up from 46% in the prior period. Total operating expenses increased 4% during the quarter. This increase primarily reflects a lower capitalization rate of development costs, which resulted in higher near-term expense recognition. This is largely offset by cost reductions across sales, marketing, and DNA. Sales and marketing expenses decreased 4%. This is primarily due to a one-time stock-based compensation expense that occurred in Q2 of 2025, which did not repeat this quarter.