Sales increase by 13% over Q2 FY2015 results

/EINPresswire.com/ -- CALGARY, ALBERTA -- (Marketwired) -- 08/23/16 -- Quorum Information Technologies Inc. (TSX VENTURE: QIS) ("Quorum" or the "Company") today released its Second Quarter (Q2) 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, 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; and
    --  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; and
    --  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

Weighted average number of common
 shares
  Basic                                 51,296,294   41,614,361   51,296,294
  Diluted                               51,296,294   41,818,297   51,296,294

----------------------------------------------------------------------------




                                                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)

Weighted average number of common
 shares
  Basic                                 41,614,361   51,296,294  41,532,538
  Diluted                               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, NAPA and Bumper to Bumper 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 June 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.

Contacts:
Maury Marks
403-777-0036 ext 104
MarksM@QuorumDMS.com