CALGARY, ALBERTA–(Marketwired – Nov. 17, 2016) – Quorum Information Technologies Inc. (TSX VENTURE:QIS) (“Quorum” or the “Company”) today released its Third Quarter (Q3) Fiscal Year (FY) 2016 results. Quorum delivers its dealership management system (DMS), XSELLERATOR™, and related services to General Motors, Chrysler, Ford, Toyota, Hyundai, Kia, Nissan, Subaru, and independent dealerships throughout North America.
Maury Marks, Quorum's President and CEO, made the following remarks about the Company's Q3 FY2016 operational and financial results:
Operational results highlights for Q3 FY2016 are as follows:
- Higher utilization of our product is critical to dealership satisfaction and reference ability. Quorum continues to enhance three important areas of our software and we track key dealership utilization metrics related to these areas in a Dealership Success Scorecard:
- Communicator features text, email and instant message functionality that is integrated into the XSELLERATOR workflow. Aggregated data on Communicator's recent usage is shown below.
- Make More Money (“M3”) is an initiative that focuses on ten XSELLERATOR processes that drive incremental revenue into our dealership customers' operations. Aggregate data from the Vehicle Inspection Process (“VIP”), one of the ten M3 processes, is shown below.
- Sales CRM – Quorum continues to make significant enhancements to sales focused Customer Relationship Management (CRM) features within XSELLERATOR. Additional usage statistics will be included to the Dealership Success Scorecard later in 2016.
| Dealership Success Scorecard(1) |
| Communicator – Dealerships utilizing Communicator: 215 |
| Messages in Q3 FY2016: 1,014,646 |
| Year over year message growth: 19% |
| M3 (VIP only) – Dealerships utilizing VIP: 101 |
| Total Q3 FY2016 incremental Customer Pay revenue: $17,573,163 |
| Year over year revenue growth: 33% |
| Sales CRM – Dealerships trained: 45 |
| Total Q3 FY2016 retail deals processed through Sales CRM: 2,181 |
| Total Q3 FY2016 retail deals processed for the stores: 3,386 – Sales CRM utilization of 64% |
| Total # of dealerships that have moved away from 3rd party CRM systems: 15 |
| (1) The numbers and dollar figures included in the Dealership Success Scorecard are based on dealership results. |
- Key metrics are as follows:
- Each year we conduct two Customer Satisfaction Index (“CSI”) surveys. The combined yearly results are:
- 2016 reported 87% of dealer principals as “satisfied” or “very satisfied” and 86% of end users as “satisfied” or “very satisfied” overall.
- 2015 reported 82% of dealer principals as “satisfied” or “very satisfied” and 89% of end users as “satisfied” or “very satisfied” overall.
- Our monthly Support Center CSI survey continues to report approximately 95% “very satisfied” with the service received from our support team.
- Each year we conduct two Customer Satisfaction Index (“CSI”) surveys. The combined yearly results are:
Financial results highlights for Q3 FY2016 are as follows:
- Sales increased by 10% to $3,059K in Q3 FY2016 from $2,779K in Q3 FY2015. Total core revenue, excluding project-related transitions revenue, increased by 19% in Q3 FY2016 compared to Q3 FY2015. The increase in sales is due to:
- An increase of $216K in recurring support revenue as a result of having more active dealership rooftops at the end of Q3 FY2016 as compared to the end of Q3 FY2015;
- An increase of $98K in revenue from existing customers as a result of completing more on-site training for our dealerships;
- An increase of $167K in new implementation revenue which was a result of completing more installations in Q3 FY2016 as compared to Q3 FY2015; and
- A decrease of $201K in transitions (server and operating system upgrades) revenue as compared to Q3 FY2015 from converting our customers to the new Microsoft Windows and SQL Server 2012 Products.
- During Q3 FY2016, margin after direct costs increased by $130K to $1,586K compared to $1,456K for Q3 FY2015. Margin after direct costs as a percentage of sales remained consistent at 52%.
- Earnings before interest, taxes, depreciation, amortization, stock-based compensation and foreign exchange (EBITDA) increased by $113K to $582K in Q3 FY2016 from $469K in Q3 FY2015. EBITDA as a percentage of sales was 19%. Increased margin after direct costs was offset by an increase in salaries and benefits expense due to increased staffing levels, as well as a decrease in sales and marketing expense.
- Income before deferred income tax expense increased by $129K to $224K in Q3 FY2016 from $96K in Q3 FY2015.
- Quorum had comprehensive income of $102K in Q3 FY2016 compared to $91K in Q3 FY2015. The increase is mainly due to the above-mentioned EBITDA increase of $113K and a $34K decrease in stock-based compensation expense offset by a $40K increase in depreciation and amortization, and a $121K increase in deferred income tax expense.
- Net working capital at September 30, 2016 was $5,630K with a current ratio of 6.00, compared to $5,129K at December 31, 2015, with a current ratio of 5.05, an increase of $501K.
At over $3.0 million, Q3 FY2016 represented a 10% growth in revenue and was the strongest revenue quarter in the Company's history. Sales growth came from our core revenue streams of new installations, recurring support revenues and training revenue. The Company also generated margin after direct costs (gross margin) of 52% and EBITDA of 19% compared to sales. Quorum has seen twelve consecutive quarters of significant revenue growth (over the prior year quarters) and we continue to increase our staffing levels in anticipation of future growth. Our strategy to focus on product innovations, improving product utilization and superior levels of customer service has increased the market demand for our product and services.
Quorum has filed its Q3 2016 consolidated financial statements and notes thereto as at and for the period ended September 30, 2016 and accompanying management's discussion and analysis in accordance with National Instrument 51-102 – Continuous Disclosure Obligations adopted by the Canadian securities regulatory authorities. Additional information about Quorum will be available on Quorum's SEDAR profile at www.sedar.com and Quorum's website at www.QuorumDMS.com.
Financial Highlights
| Nine Months Ended Sept 30, 2016 |
Nine Months Ended Sept 30, 2015 |
Q3 |
Q3 |
Q2 |
Q2 |
Q1 |
Q1 |
|||||||||||
| Gross revenue | $ | 9,050,725 | $ | 7,915,053 | $ | 3,059,123 | $ | 2,778,819 | $ | 3,044,403 | $ | 2,705,927 | $ | 2,947,199 | $ | 2,430,307 | ||
| Direct costs | 4,343,503 | 3,511,013 | 1,473,501 | 1,322,708 | 1,436,926 | 1,166,235 | 1,433,076 | 1,022,070 | ||||||||||
| Margin after direct costs | 4,707,222 | 4,404,040 | 1,585,622 | 1,456,111 | 1,607,477 | 1,539,692 | 1,514,123 | 1,408,237 | ||||||||||
| Earnings before interest, taxes, depreciation and amortization (EBITDA) |
1,527,806 |
1,449,178 |
582,013 |
468,856 |
435,999 |
605,362 |
509,794 |
374,960 |
||||||||||
| Income before deferred income tax expense |
655,540 |
608,366 |
224,484 |
95,683 |
179,963 |
369,582 |
251,093 |
143,101 |
||||||||||
| Net income (loss) | 363,069 | 439,956 | 60,140 | 52,080 | 174,234 | 393,524 | 128,695 | (5,648 | ) | |||||||||
| Comprehensive income | 288,091 | 587,282 | 101,620 | 91,326 | 178,649 | 282,286 | 7,822 | 213,670 | ||||||||||
| Basic income (loss) per share | $ | 0.0071 | $ 0.0104 | $ | 0.0012 | $ 0.0012 | $ | 0.0034 | $ 0.0095 | $ | 0.0025 | $ (0.0001 | ) | |||||
| Fully diluted income (loss) per share | $ | 0.0071 | $ 0.0104 | $ | 0.0012 | $ 0.0012 | $ | 0.0034 | $ 0.0094 | $ | 0.0025 | $ (0.0001 | ) | |||||
| Weighted average number of common shares | ||||||||||||||||||
| Basic | 51,454,611 | 42,138,885 | 51,454,611 | 42,138,885 | 51,296,294 | 41,614,361 | 51,296,294 | 41,532,538 | ||||||||||
| Diluted | 51,454,611 | 42,138,885 | 51,454,611 | 42,138,885 | 51,296,294 | 41,818,297 | 51,296,294 | 41,818,297 | ||||||||||
About Quorum
Quorum is a North American company focused on developing, marketing, implementing and supporting its XSELLERATOR product for GM, Chrysler, Ford, Toyota, Hyundai, KIA, Nissan, Subaru, and independent dealerships. XSELLERATOR is a dealership and customer management software product that automates, integrates and streamlines every process across departments in a dealership. One of the select North American suppliers under General Motors' DTAP program, Quorum is also one of largest DMS provider for GM's Canadian dealerships with 25% of the market. Quorum is a Microsoft Partner in both Canada and the United States. Quorum Information Technologies Inc. is traded on the Toronto Venture Exchange (TSX-V) under the symbol QIS. For additional information please go to www.QuorumDMS.com.
Forward-Looking Information
This press release contains certain forward-looking statements and forward-looking information (“forward-looking information”) within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as “anticipate”, “believe”, “plan”, “intend”, “objective”, “continuous”, “ongoing”, “estimate”, “expect”, “may”, “will”, “project”, “should” or similar words suggesting future outcomes. In particular, this press release includes forward-looking information relating to results of operations, plans and objectives, projected costs and business strategy. Quorum believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.
Forward-looking information is not a guarantee of future performance and involves a number of risks and uncertainties some of which are described herein. Such forward-looking information necessarily involves known and unknown risks and uncertainties, which may cause Quorum's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include but are not limited to the risks identified in Quorum's Management's Discussion and Analysis for the period ended September 30, 2016. Any forward-looking information is made as of the date hereof and, except as required by law, Quorum assumes no obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Contact Information:
403-777-0036 ext 104
MarksM@QuorumDMS.com
