Earnings call transcript: Quorum Information Tech Q2 2025 revenue beats

Quorum Information Technologies Inc reported its Q2 2025 earnings, revealing a revenue of $10,010,000, slightly surpassing the forecast of $9,900,000 by 1.11%. Despite this revenue beat, the company’s earnings per share (EPS) remained modest at $0.005. According to InvestingPro data, the company, currently valued at $72.92M, has maintained profitability over the last twelve months. The stock trades at $19.76, near its 52-week low of $18.84, potentially presenting an interesting entry point for value investors.

Key Takeaways

• Revenue exceeded expectations by 1.11%, reaching $10,010,000.
• SaaS and BDC segments showed growth, contributing to overall performance.
• Stock price remained stable post-earnings, reflecting neutral market sentiment.
• Automotive tariffs present potential challenges for the remainder of the year.

Company Performance

Quorum Information Technologies demonstrated steady performance in Q2 2025, with total revenue increasing by 3% compared to the previous year. The company’s diversified income streams, particularly the growth in SaaS and BDC revenues, contributed to this positive outcome. InvestingPro analysis reveals the company operates with moderate debt levels and maintains strong liquidity, with liquid assets exceeding short-term obligations. However, the looming impact of automotive tariffs and import restrictions could pose challenges in the upcoming quarters.

Financial Highlights

• Revenue: $10,010,000, up 3% year-over-year
• SaaS revenue: $7,300,000, a 1% increase
• BDC revenue: $2,700,000, an 11% increase
• Adjusted EBITDA: $1,800,000, representing 18% of revenue
• Gross margin: $5,000,000, or 49% of revenue

Earnings vs. Forecast

Quorum’s actual revenue of $10,010,000 exceeded the forecast of $9,900,000 by 1.11%. This performance marks a continuation of the company’s trend of steady revenue growth, although the EPS of $0.005 remains modest.

Market Reaction

The stock price of Quorum Information Technologies remained unchanged post-earnings, closing at $0.70. This stability suggests a neutral market reaction, with investors likely weighing the revenue beat against broader macroeconomic concerns.

Outlook & Guidance

Looking forward, Quorum is exploring various capital allocation strategies, including organic growth investments and potential acquisitions. Despite the positive revenue performance, the company remains cautious about the macro environment, particularly the impact of automotive tariffs. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes detailed analysis of the company’s financial health (currently rated as GOOD with a score of 2.93) and growth prospects. The platform offers 7 additional ProTips and extensive financial metrics to help investors make informed decisions.

Executive Commentary

"Our dealerships are creative. They’re gonna come up with ways to improve the fixed operations business, the used vehicle business," said Maury Marks, President and CEO. He also expressed optimism about the BDC side of the business and anticipated exciting AI improvements in the coming years.

Risks and Challenges

• Automotive tariffs could disrupt market stability.
• Import restrictions may impact dealership operations.
• Limited EPS growth could concern investors seeking higher returns.

Q&A

During the earnings call, analyst Gavin Fairweather inquired about the macro environment and dealership priorities. The discussion highlighted the demand for BDC services and the potential for mergers and acquisitions, reflecting the company’s strategic focus amidst market uncertainties.

Full transcript - Quorum Information Technologies Inc (QIS) Q2 2025:

Victor, Conference Call Operator: Good day, and thank you for standing by. Welcome to the Coram Information Technologies Second Quarter twenty twenty five Results. At this time, all participants are in a listen only mode. After the speakers’ presentation, we’ll open up for questions. To ask a question during the session, you will need to press 11 on your telephone.

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today’s call is being recorded. I would now like to hand it over to your speaker today, Maury Marks, President and CEO. Please go ahead.

Maury Marks, President and CEO, Coram Information Technologies: Thank you, Victor. Hello, everybody, and thank you for attending Coram Information Technologies Q2 twenty twenty five Results Conference Call and Concurrent Webcast. Joining me is our Chief Financial Officer, Marilyn Baum. Quorum offers innovative and robust technology solutions and services to vehicle dealerships and original equipment manufacturers or OEMs across North America. With a uniquely integrated product suite of 13 essential software solutions that are used in whole or in part by over 1,400 dealership customers across North America, there is at least one Quorum software solution installed in 40% of the franchise automotive dealerships in Canada.

Offering 13 of the 25 most common categories of software solutions that automotive dealerships utilize, Quorum is well positioned to develop, partner or acquire software solutions for the remaining 12 categories. Looking to our Q2 twenty twenty five results, Quorn delivered a 3% increase in reoccurring revenue, driven by a 1% increase in SaaS revenue and 11% increase in BDC revenue. This 11% growth in BDC revenue reflects strong demand for our service CRM and BDC offerings, particularly from new dealership customers. I am also happy to report that our adjusted EBITDA in Q2 twenty twenty five increased to $1,800,000 or 18% of revenue from $1,500,000 or 15% of revenue in Q1 twenty twenty five. This was a result of the adjusted EBITDA improvement plan that we implemented in Q1 twenty twenty five.

Our adjusted EBITDA of $1,800,000 in Q2 twenty twenty five was also comparable to Q2 twenty twenty four’s $2,000,000 when accounting for the $200,000 in software development costs that we chose to more conservatively expense versus capitalize this year. Comparatively, our cash EBITDA in Q2 twenty twenty five was $1,400,000 versus $1,300,000 in Q2 twenty twenty four. The improvements in our adjusted EBITDA allowed us to pay down the full $900,000 of our cash flow loan balance in Q2 twenty twenty five and that portion of the BDC Capital loan is now fully repaid. Strengthening our balance sheet has been a key focus as we have reduced the BDC Capital loan balance from 9,100,000.0 at the 2023 to $2,800,000 at the end of Q2 twenty twenty five. We’ve also optimized our lease space in Q2 twenty twenty five by canceling a lease for unused space in St.

John’s, New Brunswick and by reallocating to a smaller office in Q3 twenty twenty five in St. John’s, Newfoundland And Labrador. On our balance sheet, our lease asset decreased from $1,400,000 at the end of Q4 twenty twenty four to $500,000,000 at the end of Q2 twenty twenty five, while lease liabilities declined from 1,600,000 to $400,000 reflecting our office space optimization efforts. At the end of Q2 twenty twenty five, Quorum had $3,600,000 in cash and cash equivalents and $4,200,000 in net working capital. Marillyn will now review our Q2 twenty twenty five financial results in more detail and I will follow-up with some additional comments.

After our prepared remarks, we will open the floor to your questions. Marilyn, please go ahead.

Marilyn Baum, Chief Financial Officer, Coram Information Technologies: Thank you, Maury, and good day everybody. Thank you for being here with us today. I would like to remind everyone that certain statements in this presentation are forward looking in nature. These include statements involving no and unknown risks, uncertainties and other factors outside of management’s control that could cause actual results to differ materially from those expressed in the forward looking statements. Quorum is not assuming responsibility for the accuracy and completeness of the forward looking statements and does not undertake any obligation to publicly revise these forward looking statements to reflect subsequent events or circumstances.

For additional information on possible risks, please refer to our annual MD and A dated 12/31/2024, on the sedarplus.ca website. As Maury mentioned, in Q2 twenty twenty five, Quorum also expanded its top line revenue year over year, significantly improved its adjusted EBITDA and cash EBITDA quarter over quarter and paid out the remaining balance of the cash flow loan portion of our BDC capital loan facility. Year over year, the 2025 as compared to the 2024 saw total revenue increased by 3% to $10,300,000 SaaS revenue increased by 1% to $7,300,000 BDC revenue increased by 11% to $2,700,000 due to new customer revenue. SaaS gross margin decreased to 65% from 67%, primarily due to an increase in third party costs. BDC gross margin remained consistent at 20% as Forum continues to work on multiple initiatives to reduce the BDC cost structure.

Looking to quarter over quarter gross margin improvement, our BDC gross margin returned to 20% in Q2 twenty twenty five compared to 15% in Q1 twenty twenty five as we implemented our adjusted EBITDA improvement plan. Overall, gross margin increased to $5,000,000 or 49% of revenue in Q2 twenty twenty five compared to $4,900,000 or 50% in Q2 twenty twenty four. Adjusted EBITDA decreased by 7% to $1,800,000 or an 18% margin compared to $2,000,000 or a 20% margin year over year, primarily because we expensed $200,000 more software development costs in Q2 twenty twenty five versus Q2 twenty twenty four, as Moyn mentioned. Our adjusted EBITDA in Q2 twenty twenty five increased to 1,800,000 or 18% of revenue from $1,500,000 or 15% of revenue in Q1 twenty twenty five. This was a result of the adjusted EBITDA improvement plan we implemented in Q1 twenty twenty five, and Lori will talk about that later in the call.

Comparatively, our cash EBITDA in Q2 twenty twenty five were $1,400,000 versus $1,300,000 in Q2 twenty twenty four. In Q2 twenty twenty five, Quorum prepaid $800,000 in principal and interest on the cash flow loan portion of our BDC capital loan facility, which now has been fully repaid six months earlier than originally anticipated and with the remaining mezzanine loan portion of the BDC Capital loan facility standing at 2,800,000.0 As mentioned on our past few earnings calls, Quorum will continue to prepay 15 of the BDC Capital mezzanine loan balance of $2,800,000 as of 06/30/2025, on an annual basis until maturity in August 2027. Note that paying more than 15% on an annual basis would result in significant penalties to Quorum. As of 06/30/2025, Quorum had net working capital of $4,200,000 cash and cash equivalents of $3,600,000 and total debt to cash EBITDA of 0.8 times compared to two times at 06/30/2024. With that, I’d like to pass it back to Maury.

Maury Marks, President and CEO, Coram Information Technologies: Thank you, Marilyn. As mentioned, our adjusted EBITDA in Q2 twenty twenty five increased to $1,800,000 or 18% of revenue from $1,500,000 or 15% of revenue in Q1 twenty twenty five. This was a result of our adjusted EBITDA improvement plan we implemented in Q1 twenty twenty five. The key elements of this plan were the following initiatives: number one, office lease cost savings from significantly reducing our lease space, which reduced the related lease asset and liability on our balance sheet number two, third party cost savings, including a change in benefit plan providers that resulted in significant savings Number three and most critically BDC gross margin improvements, which allowed us to return to a 20% gross margin in Q2 twenty twenty five after posting a 15% BDC gross margin in Q1 twenty twenty five. We deployed new technology including AI tools to allow our BDC agents to be more effective and efficient at booking dealership customers service appointments.

And we deployed these changes at a time when we also implemented new dealership customers in our BDC and related service CRM software. With a stronger balance sheet and improved profitability, Quorum is well positioned to evaluate a range of capital allocation strategies that support long term shareholder value. As I’ve mentioned on past earnings calls, Quorum has multiple diverse capital allocation options including one, investing in organic sales growth, including strategic product investments to pursue new dealerships in Canada and or The U. S. Market Number two, pursuing inorganic growth through accretive acquisitions that enhance our product suite and provide opportunities to improve our organic growth.

Number three, allocating capital to initiatives such as a normal course issuer bid to repurchase shares or the payment of dividends. That said, the automotive tariffs introduced by both The U. And Canadian governments continue to create uncertainty around future capital allocation decisions. The tariffs are currently impacting some import dealerships vehicle inventories and will impact vehicle sales for most dealerships on both sides of the border. Dealerships and OEMs will face challenges in raising prices, potentially losing market share and or experiencing contracted gross margins.

While these headwinds may impact dealership operations, Quorum’s diversified product suite and deep experience in fixed operations enable us to support our customers through these challenges. Despite the uncertainty, we are starting to make additional product investments with our new user interface and user experience or UI UX project for our DMS product. We’re working closely with our dealership partners to co design these enhancements, ensuring the new UIUX delivers meaningful improvements to their daily workflows. I would like to conclude by sincerely expressing my appreciation to our employees. Their commitment to Quorum is crucial to achieving our 2025 plan.

The hard work of our employees is enhanced by our integrated suite of 13 essential software solutions and services. This product suite is fundamental to our profitable growth strategy as it facilitates product cross selling and plays a vital role in driving the success of our dealerships, thereby increasing value for both Quorum and its customers. Operator, I’d now like to open this conference call to any questions from our audience.

Victor, Conference Call Operator: Thank

Maury Marks, President and CEO, Coram Information Technologies: you.

Victor, Conference Call Operator: Our first question will come from the line of Gavin Fairweather from Cormark. Your line is open.

Gavin Fairweather, Analyst, Cormark: Hey, Maury. Good morning. Maybe just to start on the macro and to dig a little bit deeper. I mean, I’m curious for the conversations that you’re having with clients, how is it going? What are the priorities that they have?

What opportunities is that presenting for Quorum? And then are you also a little bit worried about kind of churn and financial difficulties in the base? Maybe just expand on that, that’d be helpful.

Maury Marks, President and CEO, Coram Information Technologies: Yes, sure. So Gavin, I think based on our conversations with the dealerships, I think the first half of the year was a relatively strong year for them, right? And that they were selling a lot of what I would call pull ahead purchases, because consumers were rushing to buy before the anticipated tariffs or they had inventory that didn’t have tariffs on top of them. And so I think first half of the year was quite comfortable, quite solid for them. I think what people are looking at is in the second half of the year, especially import dealerships out there are you know, there’s just certain vehicle brands that they they just can’t for certain makes, they just they can’t get, because the OEM has decided not to They they might be manufactured in The US, and they don’t wanna ship them to Canada because there’d be a terraform or vice versa or whatever the case may be.

So, you know, I think people are just a little more cautious going into the second half of the year. But also keep in mind, right, with all our dealerships, and we’ve talked about this in the past, with all our dealerships, their fixed operations business, their service and parts business is sort of the anchor to their dealerships. That’s a very consistent business for them regardless of what happens in in, new vehicles the new vehicle sales side of things. It, for some dealerships, that business covers their entire cost of the dealership.

Gavin Fairweather, Analyst, Cormark: And

Maury Marks, President and CEO, Coram Information Technologies: and and so anything that that dealership makes on the new vehicle side of things is is extra, profit on top of that. So, and that’s a very consistent business for for dealerships. Also, in mind that used vehicle inventory is, the used vehicle market is good. Like, are up. Prices are up slightly on the used vehicle side of things.

So, you know, franchise dealerships also have, used vehicles that they can go ahead and sell. So I you know, I’m thinking looking forward, we’re not we’re not worried, about our dealerships. They always get a bit concerned and rightfully so when new vehicle sales decline, for them, but, our dealerships are creative. They’re they’re gonna come up with ways to improve the fixed operations business, the used vehicle business. And and so, yeah, we’re we’re confident that they’re going to be very creative, and we’re gonna help them, wherever we possibly can.

Gavin Fairweather, Analyst, Cormark: Yeah. That’s a good kind of lead into my second question. I mean, the script referenced dealer demand both on the services side but also the CRM software side. So is that an area where you do see increased opportunity to help the dealerships over the back half of the year? Do you think that that demand will be maintained?

Maury Marks, President and CEO, Coram Information Technologies: Yeah. We we we do. We think yeah. We’re we believe that demand will be maintained. And right now, right, we’re seeing that that demand.

We’re also just sort of a side note on on the BDC business and the related service CRM software, which is now, you know, enhanced with AI tools in it. And our whole offering is enhanced with new software that we’ve put in place to really improve efficiency across that group. We’re all what we’re also seeing in that group is we’re seeing, just a real improvement in effectiveness in effectiveness. For instance, our error rate on service appointments has gone down significantly for for that particular business, which just means that the dealerships can have a lot more confidence in in our ability to look after them on that side of the business. So, you know, I don’t like to make a lot of forward looking statements in this particular call, but I’m fairly bullish on where we’re going on the BBC side of our business.

I am excited about some of the new AI improvements that we’ll bring into that business. And yeah, no, I think it has an exciting future for us.

Gavin Fairweather, Analyst, Cormark: And then maybe on BDC gross margins, nice to see the snapback there to 20%, which is the highest that we’ve seen in a little while. And you referenced some of the efficiency gains that you’ve made to help profitability there. And I know the gross margins on this line can bounce around a little bit. So would you say 20% is at the higher end of the range? Do you see further efficiency gains that you can make?

Maybe just help us out on that one.

Maury Marks, President and CEO, Coram Information Technologies: Yes. We’re always looking for further efficiency gains. So without a doubt, we’re we’re gonna be looking for further efficiency gains on the BDC side of the business. Some of those are going to be AI driven. And yeah, over the next probably two to three years, we’re going to see likely a number of exciting AI improvements that will help our BDC business and its related gross margins.

Gavin Fairweather, Analyst, Cormark: Okay. That’s interesting. It doesn’t sound like you’re willing to put a BDC gross margin target out there over the next couple of years? Have to ask.

Maury Marks, President and CEO, Coram Information Technologies: Yes. No, sorry. I’m not putting a BDC gross margin target out there for you. You’ll just have to wait until our results come out and we’ll just keep moving the needle.

Gavin Fairweather, Analyst, Cormark: Yes. Okay. Sounds good. And then on M and A, mean, it’s certainly a fluid macro environment and you talked about how that might be kind of influencing your thinking around capital allocation around M and A, but the balance sheet is also in great shape and maybe the valuations might be a little bit more attractive. So what would it take for you to, you know, be active on on m and a given the current backdrop?

Maury Marks, President and CEO, Coram Information Technologies: Yeah. No. Great question. Yeah. I think we’re we’re getting to the point where we’re wanting to get more active on M and A.

We have seen a number of US opportunities over the last couple of quarters but are hesitant to pursue those U. S. Opportunities. Not that we haven’t pursued a couple of them, they were just so attractive. But they’re tough ones for us to make in the existing climate.

So we’ll continue to look at Canadian opportunities as well. But yes, I think over time you’ll see us ramp up our M and A activity. There’s, there seems to be a lot of opportunities in the marketplace.

Gavin Fairweather, Analyst, Cormark: Okay. That’s it for me. Thanks so much and congrats on the nice bounce back in results.

Maury Marks, President and CEO, Coram Information Technologies: Yes. Yes. Appreciate it. And thanks for the questions.

Victor, Conference Call Operator: Thank you. I’m not showing any further questions in the queue at this moment. I would now like to turn it back over to Maury for closing remarks.

Maury Marks, President and CEO, Coram Information Technologies: All right. Well, thanks everybody for joining us today and your continued support of Quorum. And we look forward to talking to you again in after the end of Q3. Thank you.

Victor, Conference Call Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone have a great day.

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