Quorum Information Technologies (QIS) Q3 2024 earnings summary

Executive summary

• Achieved record Adjusted EBITDA of CAD 2.3 million (up 15% year-over-year) and Adjusted Cash Income of CAD 1.8 million (up 39% year-over-year) in Q3 2024, with four consecutive quarters of 20%+ Adjusted EBITDA margin.

• Total revenue for Q3 2024 was CAD 9.9 million, a 5% decrease year-over-year, with SaaS revenue up 2% to CAD 7.2 million and BDC revenue down 11% to CAD 2.5 million.

• Strategic focus on cross-selling to existing customers, leveraging a suite of 13 software solutions used by 1,418 dealerships across North America, with 40% penetration in Canadian franchised dealerships.

• Paid down CAD 3 million on BDC Capital debt facility in Q3 2024, reducing net debt and improving financial flexibility.

• Cost management and margin improvement initiatives drove profitability, with Adjusted EBITDA margin reaching a record 23%.

Financial highlights

• Adjusted EBITDA increased 15% year-over-year to CAD 2.3 million, with margin rising from 19% to 23%.

• Adjusted Cash Income rose 39% to CAD 1.8 million, with margin expanding from 12% to 18%.

• SaaS revenue grew 2% to CAD 7.2 million, BDC revenue declined 11% to CAD 2.5 million, and services/one-time revenue fell 54% to CAD 0.3 million.

• Gross margin was 50% of total revenue; SaaS gross margin 68%, BDC gross margin 21%.

• Net income increased by CAD 1.1 million to CAD 0.8 million, a 348% year-over-year increase.

Outlook and guidance

• Evaluating capital and strategic investment opportunities, prioritizing those with the highest return on invested capital.

• Plans to increase sales and marketing efforts in both Canada and the U.S., and to pursue M&A for product suite expansion.

• Focus remains on cross-selling to existing customers and optimizing pricing for key products.

• Large cross-sell TAM of CAD 54 million annually and new customer TAM of CAD 1.8 billion identified.

• Continued strong demand for fixed operations solutions; vehicle sales solutions also seeing renewed demand.