Quorum Information earns $174,234 in Q2
2016-08-23 18:09 ET - News Release
Mr. Maury Marks reports
QUORUM RELEASES Q2 FISCAL YEAR 2016 RESULTS
Quorum Information Technologies Inc. has released its second quarter 2016 results. Quorum delivers its dealership management system (DMS), XSellerator, and related services to General Motors, Chrysler, Ford, Toyota, Hyundai, Kia, Nissan, Subaru, NAPA and Bumper to Bumper-franchised dealership customers as well as some non-automotive dealerships throughout North America.
Maury Marks, Quorum’s President and CEO made the following remarks about the Company’s Q2 FY2016 operational and financial results:
Operational results highlights for Q2 FY2016 are as follows:
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. Aggregate 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: 210
Messages in Q2 FY2016: 1,069,907
Year over year message growth: 25%
M3 (VIP only) - Dealerships utilizing VIP: 95
Total Q2 FY2016 incremental Customer Pay revenue: $17,049,635
Year over year revenue growth: 34%
Sales CRM - Dealerships trained: 35
Total # of dealerships that have moved away from 3rd party CRM systems: 11
(1) The numbers and dollar figures included in the Dealership Success Scorecard are based on dealership results.
Key metrics are as follows:
The National Automotive Dealers Association (NADA) convention was in Las Vegas, Nevada in Q2 FY2016. Quorum had a booth at the convention, which historically has taken place in Q1. This year’s convention was a success and generated a 106% increase in leads and a 126% increase in prospect demos as compared to the Q1 FY2015 convention.
Customer Satisfaction Index (“CSI”) semi-annual survey in Q1 FY2016 showed 100% of dealer principals as “satisfied” or “very satisfied” and of 88% of end users as “satisfied” or “very satisfied” overall. An additional 11% of end users reported “somewhat satisfied”. Our survey in Q1 FY2015 reported 81% of dealer principals as “satisfied” or “very satisfied” and 94% 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.
Financial Results highlights for Q2 FY2016 are as follows:
Sales increased by 13% to $3,044K in Q2 FY2016 from $2,706K in Q2 FY2015. The increase in sales is due to:An increase of $212K in recurring support revenue as a result of having more active dealership rooftops at the end of Q2 FY2016 as compared to the end of Q2 FY2015;
An increase of $231K in revenue as a result of completing more on- site training for our dealerships;
An increase of $219K in new implementation revenue which was a result of completing more installations in Q2 FY2016 as compared to Q2 FY2015;
A decrease of $323K in transitions revenue (server and operating system upgrades) as compared to Q2 FY2015 from converting our customers to the new Microsoft Windows and SQL Server 2012 Products.
During Q2 FY2016, margin after direct costs increased by $68K to $1,607K or 53% compared to $1,540K or 57% for Q2 FY2015. The 4% decrease in gross margin percentage is due to an increase in direct salaries and benefits expense as Quorum prepares to increase its future delivery capacity.
Earnings before interest, taxes, depreciation, amortization, stock-based compensation and foreign exchange (EBITDA) decreased by $169K to $436K in Q2 FY2016 from $605K in Q2 FY2015. Increased margin after direct costs was offset by:An increase in salaries and benefits expense due to increased staffing levels;
An increase in general & administrative expense due to an increase in consulting fees and rental expense;
An increase in sales and marketing expense due to the National Automobile Dealers Association (“NADA”) convention, that was scheduled in Q2 this year versus Q1 last year.
Income before deferred income tax expense decreased by $190K to $180K in Q2 FY2016 from $370K in Q2 FY2015.
Quorum had comprehensive income of $179K in Q2 FY2016 compared to $282K in Q2 FY2015. The reduction is largely due to the above-mentioned EBITDA decrease of $169K as well as a $30K increase in deferred income tax expense, offset by a $116K increase in foreign exchange gain.
Net working capital at June 30, 2016 was $5,369K with a current ratio of 5.29, compared to $5,129K at December 31, 2015, with a current ratio of 5.05, an increase of $240K.
At over $3.0 million, Q2 FY2016 represented a 13% growth in revenue and was the first quarter in the Company’s history with over $3.0 million in revenue. Sales growth came from new installations, increased recurring support revenues and higher training revenue. Quorum has seen eleven 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 Q2 2016 consolidated financial statements and notes thereto as at and for the period ended June 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
Six Six
Months Months Q2
Ended Ended Ended
June 30, June 30, June 30,
2016 2015 2016
Gross revenue $5,991,602 $5,136,234 $3,044,403
Direct costs 2,870,002 2,188,305 1,436,926
Margin after direct costs 3,121,600 2,947,929 1,607,477
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 945,793 980,322 435,999
Income before deferred income tax
expense 431,056 512,683 179,963
Net income (loss) 302,929 387,876 174,234
Comprehensive income 186,471 495,956 178,649
Basic income (loss) per share $ 0.0059 $ 0.0093 $ 0.0034
Fully diluted income (loss) per share $ 0.0059 $ 0.0093 $ 0.0034
Q2 Q1 Q1
Ended Ended Ended
June 30, March 31, March 31,
2015 2016 2015
Gross revenue $2,705,927 $2,947,199 $2,430,307
Direct costs 1,116,235 1,433,076 1,022,070
Margin after direct costs 1,539,692 1,514,123 1,408,237
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 605,362 509,794 374,960
Income before deferred income tax
expense 369,582 251,093 143,101
Net income (loss) 393,524 128,695 (5,648)
Comprehensive income 282,286 7,822 213,670
Basic income (loss) per share $ 0.0095 $ 0.0025 $ (0.0001)
Fully diluted income (loss) per share $ 0.0094 $ 0.0025 $ (0.0001)
