Quorum Information Technologies Inc. (“Quorum” or the “Company”), a
leading provider of dealership and customer management software and
value-added services to the automotive industry, released its
results for 2019 today.
“2019 was a landmark year for Quorum, with
record SaaS revenue and Adjusted EBITDA,” stated Maury Marks,
President and CEO. “We completed the Advantage (Oasis) acquisition
in 2019 and continued to build on the momentum from our
transformative acquisition of DealerMine in 2018 and our
acquisition of Autovance in 2017. We also continued to add dealers
to the XSellerator platform while significantly expanding our
product offerings. While 2019 had a major focus on product
integration, we are now taking our acquisitions to the next level
by doing significant operational integration that will springboard
us to becoming a more cohesive, efficient, and focused
organization. While the COVID-19 pandemic will impact our 2020
results, we are extremely well capitalized and have a strong plan
to emerge healthier than ever as we move through 2020, just as we
did in the last recession in 2009.”
Fourth Quarter Results
- SaaS revenue was $5.8 million, an increase of 35% compared to
Q4 2018.
- BDC revenue was $1.8 million, an increase of 118% compared to
Q4 2018.
- Total revenue was $8.7 million, an increase of 47% compared to
Q4 2018.
- Gross margin was $3.8 million, an increase of 35% compared to
Q4 2018.
- Adjusted EBTIDA was $1.0 million, an increase of 23% compared
to Q4 2018.
Fiscal Year 2019 Results
- SaaS revenue was $22.3 million, an increase of 75% compared to
2018.
- BDC revenue was $6.8 million, an increase of 751% compared to
2018.
- Total revenue was $32.8 million, an increase of 100% compared
to 2018.
- Gross margin was $15.2 million, an increase of 82% compared to
2018.
- Adjusted EBITDA was $4.6 million, an increase of 125% compared
to 2018.
- Cash balance was $8.6 million as of December 31, 2019 compared
to $1.7 million as of December 31, 2018.
- Grew our customer base to 1,022 in Q4 2019 from 876 in Q4 2018,
representing 17% growth
Financial Summary
($000’s) |
Year Ended December 31, 2019 |
|
Year Ended December 31, 2018 |
|
Q4 Ended December 31, 2019 |
|
Q4 Ended December 31, 2018 |
|
SaaS revenue |
$22,303 |
|
$12,736 |
|
$5,832 |
|
$4,330 |
|
BDC revenue |
|
6,849 |
|
|
805 |
|
|
1,752 |
|
|
805 |
|
Services and one-time revenue |
|
3,690 |
|
|
2,900 |
|
|
1,119 |
|
|
794 |
|
Total revenue |
|
32,841 |
|
|
16,441 |
|
|
8,703 |
|
|
5,929 |
|
|
|
|
|
|
Cost of revenue |
|
17,618 |
|
|
8,057 |
|
|
4,944 |
|
|
3,144 |
|
|
|
|
|
|
Margin after direct costs |
|
15,223 |
|
|
8,384 |
|
|
3,759 |
|
|
2,785 |
|
Gross margin percentage |
|
46% |
|
|
51% |
|
|
43% |
|
|
47% |
|
|
|
|
|
|
Adjusted EBITDA |
|
4,568 |
|
|
2,032 |
|
|
1,035 |
|
|
839 |
|
|
|
|
|
|
Adjusted cash income |
|
1,754 |
|
|
(118) |
|
|
294 |
|
|
289 |
|
|
|
|
|
|
Net loss |
$(1,106) |
|
$(711) |
|
$(1,479) |
|
$(198) |
|
Recent Business Highlights
- In January 2019, the Corporation
completed the acquisition of Oasis Auto Complete Systems Limited
(“Oasis”) for an aggregate purchase price of $1.1 million.
- In January 2019, DealerMine entered
into a long term strategic partnership with respect to the
establishment of a dedicated BDC for AutoCanada’s Canadian
dealerships.
- In January 2019, XSellerator
completed certification with Volkswagen (VW) and Audi. This
certification allows XSellerator to be sold to VW/Audi dealerships
which increases XSellerator’s total available market, particularly
to those dealer groups which house a variety of different vehicle
brands.
- In January 2019, Autovance expanded
its desking tool, Autovance Desk, into the US market.
- In March 2019, the Corporation
closed a $15 million debt financing facility with BDC Capital Inc.
(the “BDC Capital Facility”). The $8.125 million initial draw was
used to retire the Bridge Loan used as a temporary measure to fund
the purchase of DealerMine in late 2018, and pay the cash
consideration of the Oasis acquisition.
- In April 2019, the Corporation
completed the testing, piloting and certification of its
XSellerator DMS service inspection and quoting tools with General
Motors Canada Ltd under the GM DTAP Service Lane category.
XSellerator was already certified in this category in the US and
was the first DMS to attain the certification in Canada.
- In June 2019, the Corporation
closed a $1.5 million interest free, unsecured, repayable
investment with the Atlantic Canada Opportunities Agency (“ACOA”)
to assist with its Lead Generation Data Hub project.
- In October 2019, XSellerator
launched its DMS Sales Performance Pack, a set of integrated tools
designed to help dealerships maximize the performance of their
vehicle sales departments.
- In November 2019, Quorum
successfully closed its oversubscribed bought deal private
placement offering of common shares. Quorum issued 10,574,825
shares at a price of $0.87 per share for aggregate gross proceeds
of $9.2 million.
Novel Coronavirus (“COVID-19”)
In December 2019, a novel coronavirus disease
(“COVID-19”) was reported and on March 11, 2020, the World Health
Organization (“WHO”) characterized COVID-19 as a pandemic. Due to
the concerns over the COVID-19 pandemic, the Corporation
transitioned all staff to work from home and all onsite training
and installation activities were put on hold by March 20, 2020.
In April 2020, dealerships’ sales departments
were shut down or operating on minimal staff, while service and
parts departments operations have slowed down considerably. With
its dealership customers facing an extremely difficult business
environment, the Corporation has proactively addressed their
concerns by providing a 50% discount on their monthly support
invoices for April and May. To counteract that, Quorum is
working with both the US and the Canadian governments for relief
from the lost revenues in April and May and currently has not
committed to any additional discounts beyond May. Strategically,
this was a short-term discount to protect long-term SaaS
revenue.
While there remains some uncertainty regarding
the duration and depth of the disruption to our customers’
businesses, we are confident that the combination of the actions we
have taken to stem cash outflow, the proceeds raised from the
financing in November and government support provides us with
sufficient resources to regain growth momentum through the
recovery. Our solutions are critical to dealership operations and
should be highly valued in helping dealers recover from the
COVID-19 shutdown. Furthermore, our management team guided Quorum
through similar challenges in 2008-09 where we emerged from the
Global Financial Crisis stronger than we entered. For more
details on our COVID-19 response, please see our MD&A.
Quorum 2019 Results Conference Call
Details and Investor Presentation
Anyone wishing to participate in the call is
asked to dial-in using the following numbers and ask for the Quorum
Information Technologies Inc. 2019 Year End Results Conference
Call. Callers are asked to dial-in 5 minutes before the scheduled
start time.Details for anyone wishing to participate in the
conference call are:
|
Local: |
1 (403)
451-9838 |
|
Toll-Free North America: |
1 (888) 231-8191 |
A replay of the conference call will be
available beginning at approximately 14:00 MT on April 23, 2020
until 21:59 MT on May 7, 2020, and can be accessed by dialing:
|
Local: |
1 (403)
451-9481 |
|
Toll-Free North America: |
1 (855) 859-2056 |
|
Password#: |
5892167 |
A replay of the conference call will also be
available for at least 30 days following the call on Quorum’s
website, under the Investors section, at www.quorumdms.com.Quorum’s
2019 Year End Results investor presentation will also available for
download after the press release has been issued under the
Investors section on the Company’s website at
www.quorumdms.com.
Forward Looking Information
This report contains certain forward-looking
information and statements within the meaning of applicable
securities laws. All statements in this report, other than
statements of historical fact, which address events or developments
concerning Quorum Information Technologies Inc. ("Quorum" or the
“Corporation”) that Quorum expects to occur are "forward-looking
information and statements". The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "potential", "could",
"scheduled", "believe", "plans", "intends", "might" and similar
expressions are intended to identify forward-looking information or
statements.
In particular, but without limiting the
foregoing, this document may contain forward-looking information
and statements pertaining to the following: business plan of Quorum
including its plans for targeting new Original Equipment
Manufacturer (“OEM”) Integration, new dealership rooftop sales, and
increasing Automotive Group Partnerships; the timing for completion
and cost of OEM Integration; estimates of return on assets and
EBITDA; potential merger and acquisition (“M&A”) opportunities;
the timing of adoption of new accounting standards and the
potential impact of new accounting standards on the Corporation’s
financial statement; the effect of acquisitions on the Corporation
including the effect of the Autovance, DealerMine and Oasis
acquisitions; the effect of the BDC Capital facility; the effect
Corporation’s private placement financing; the potential effect of
the COVID-19 pandemic on industry activity and economic activity in
North America as a whole; various industry activity forecasts;
growth opportunities including those in the United States;
anticipated requirements by OEM manufacturers relating to
integrations and certifications; and other expectations, beliefs,
plans, goals, objectives, assumptions, information and statements
about possible future events, conditions, results of operations or
performance. Various assumptions were used in drawing the
conclusions or making the forecasts and projections contained in
the forward-looking statements throughout this report. The
forward-looking information and statements contained in this report
reflect several material factors, expectations and assumptions
including, without limitation: (i) capital expenditures by dealers;
(ii) market availability of current and future dealership rooftops;
(iii) schedules and timing of certain projects and Quorum's
strategy for growth; (iv) Quorum's future operating and financial
results; and (v) treatment under governmental regulatory regimes
and tax and other laws. The forward-looking information and
statements included in this report are not guarantees of future
performance and should not be unduly relied upon.
Forward-looking statements are based on current
expectations, estimates and projections that involve a number of
risks and uncertainties, which could cause actual results to differ
materially from those anticipated and described in the
forward-looking information and statements. Such information and
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
information or statements including, without limitation: (i)
volatility in exchange rates for the Canadian dollar relative to
the US dollar; (ii) liabilities and risks inherent in the software
services industry; (iii) competition for, among other things,
capital and skilled personnel; (iv) changes in general economic,
market and business conditions in Canada and the United States; and
(v) actions by governmental or regulatory authorities including
changes in income tax laws or changes in tax laws. Quorum cautions
that the foregoing list of assumptions, risks and uncertainties is
not exhaustive. The forward-looking information and statements
contained in this document speak only as of the date of this
document, and Quorum assumes no obligation to update or revise them
to reflect news events or circumstances, except as may be required
pursuant to applicable laws. Any financial outlook or future
oriented financial information in this document, as defined by
applicable securities legislation, has been approved by management
of Quorum. Such financial outlook or future oriented financial
information is provided for the purpose of providing information
about management's current expectations and plans relating to the
future. Readers are cautioned that reliance on such information may
not be appropriate for other purposes.
About Quorum Information Technologies
Inc.
Quorum is a North American company focused on
developing, marketing, implementing and supporting its portfolio of
software and services for automotive dealerships that includes:
- XSelleratorTM, a Dealership Management System (DMS) that
automates, integrates and streamlines key processes across
departments in a dealership, and emphasizes revenue generation and
customer satisfaction.
- DealerMine CRM, a sales and service Customer Relationship
Management system and set of Business Development Center services
that drives revenue into the critical sales and service departments
in a dealership.
- Autovance, a sales desking system that increases sales
department gross margins and improves customer satisfaction for
dealerships.
- Advantage, a full showroom system for both franchised and
independent dealerships and a comprehensive operating system that
includes accounting for the independent market.
Quorum has filed its 2019 unaudited condensed
consolidated financial statements and notes thereto as at and for
the year ended December 31, 2019, and accompanying management and
discussion and analysis in accordance with National Instrument
51-102 - Continuous Disclosure Obligations adopted by the Canadian
securities regulatory authorities. 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.
Quorum Contact: Maury Marks
403-777-0036MarksM@QuorumDMS.com
Neither the TSX Venture Exchange nor its
regulation services provider (as that term is defined in the
policies of the TSX Venture Exchange) has reviewed this release and
neither accepts responsibility for the adequacy or accuracy of this
release.
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