Good day, ladies and gentlemen, and welcome to today's 2021 Annual Results Conference Call. [Operator Instructions] Please also note that this call is being recorded. I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Mr. Brendan Hopkins. Sir, please begin.

Brendan Hopkins - Investor Relations

Thank you, and thank you everyone for joining us today. We have a brief Safe Harbor and we'll get started. Except for historical information contained herein, the statements in this conference call are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from the forecasted results.

With that said, I would like to turn the call over to Dave Shworan, CEO of QuoteMedia.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Thanks, Brendan. Welcome everybody and thank you for joining us to discuss our 2021 year-end results. We had a fantastic year in 2021 and I'm happy to report that we achieved 22% increase in revenue over the previous year. We have now crossed the $15 million revenue mark and we're well on our way to continue this growth curve. Our net income improved by over $800,000 and our EBITDA increased over $900,000. This past year was a game-changing year for us. As I mentioned on previous calls, we had several large firms or big fish as some of you call them coming to us for products and services.

I'm pleased to say that we did win the contracts and we will be announcing those in the coming months. In fact, they're all underway now. But the final contracts are still being drafted and approved with these large firms, but the paperwork takes several months to complete. Needless to say, the fact that QuoteMedia was chosen to replace the incumbent data and solutions providers, which happened to be thousands of times our size at times is a tremendous sign of approval of what we've achieved as a company. To win over our multi-billion dollar competitors was truly a cause for celebration for us.

The revenue from these large clients will certainly take us to the next level. We are now seeing very good uptake of all of our new products. In 2021, we launched quite a few new products and services, including new analytics, new market research services, new data sets and new financial applications. We're continuing to expand on all of these areas. And it was because of the direction that we're going to keep moving ahead into our new propriety products, data and analytics that these firms are choosing us.

Last year was our biggest growth year in the company's history. And I know that this year is already on track to bypass it. I want to thank all of you, our shareholders for hanging in there as we grew this company fighting hard to be invited to the table with the biggest firms in the industry. And I'm proud to say that we did it.

At this point, I'd like to turn the mic over to Keith Randall who will take us through the numbers and then we can open up the call to questions.

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Thank you, Dave, and welcome everyone. I'll start with the income statement. Note that all comparisons are on a year-over-year basis unless otherwise noted. Overall, we had an outstanding year with a 22% increase in total revenue. Breaking down our revenue, our revenue growth was driven by a 36% increase in total Quotestream revenue, and in particular, a 42% increase in corporate Quotestream revenue. The increase in corporate Quotestream was primarily due to new contracts signed since the comparative year and an increase in the number of subscribers for existing customers.

The new products added over the past couple of years continue to gain traction in the market. And we continue to add and improve the functionality of our existing products. This has allowed us to attract larger customers and increase the average revenue for our existing customers. Our individual Quotestream revenue was also strong increasing by 22% due to increases in subscribers and average revenue per subscriber. The increase in subscribers can be attributed to new marketing efforts and the increase in average revenue as due mainly to additional data offering.

There also continues to be a need for our services for customers working remotely during the pandemic, a trend we expect to continue indefinitely. Interactive content revenue, which is web display content, increased 8% mainly due to an increase in customers. The success of new products introduced over the past couple of years such as QMod and the broadening of our data coverage has allowed us to expand our customer base. Our cost of revenue consists of fixed and variable stock exchange fees and other data costs. It also includes amortization of capitalized development costs.

Our cost of revenue increased 26% mainly due to increased usage fees resulting from the increase in sales volume. Vendor price increases and our expanded data coverage also contributed to the increase in cost of revenue. As the increase in cost of revenue outpaced our revenue growth for the year, our gross margin decreased to 44% from 46% in the comparative year. Our gross margins were impacted by our revenue mix, as our Quotestream revenue grew at a higher rate than our Interactive Content revenue, which has higher gross margins.

Our total operating expenses increased 7% during the year. Most of the increase in operating costs relate to improvements made to our infrastructure, security and business continuity management. Improvements were necessary to broaden our product lines and data coverage. The increase is also related to costs associated with obtaining SOC2 Type II certification, which we expect to achieve in the upcoming year. SOC2 certification provides independent insurance that our organization maintains the highest level of information security, data integrity and business resiliency.

Sales and marketing expenses increased 13% and development expenses increased 4% primarily due to additional personnel hired to achieve our expansion objectives. G&A expenses increased by 2% primarily due to an increase in professional fees, which were due in part to fees related to the SOC2 certification process. The increase in G&A expenses was offset by a decrease in bad debt as we experienced unusually high bad debts in 2020 due to COVID-19. Net income for the year was $212,000 compared to a loss of $646,000 incurred in the prior year, an improvement of $858,000. Our adjusted EBITDA was $1.65 million compared to $734,000 in the prior year, an improvement of $916,000.

Please refer to the reconciliation included in our press release for the calculation of adjusted EBITDA. Turning now to our balance sheet and cash flow statement; our cash totaled $259,000 at year-end, which was $159,000 decrease from 2020. Our net cash flow from operations was $2.2 million. Our net cash used in investing activities was $2.3 million due to increased spending on infrastructure and product development. As circumstances dictate, however, we have the flexibility to reduce development spending and maintain a strong balance sheet and liquidity position.

Looking forward, in the first quarter of 2022 we signed preliminary agreements with two large multinational financial institutions to start services while their contracts are being finalized. Pursuant to those contracts today we received partial development payments totaling $400,000 in 2022 based on those new contracts and our other contracts there, excuse me, our other customers currently under contract. In the upcoming year we expect comparable revenue growth to the 22% we achieved in 2021.

And because the new contracts recently signed have higher gross margins than our current average, we're expecting our net income to significantly improve upon the upcoming year. We also believe our pending SOC2 certification will allow QuoteMedia to make even greater gains in market share as SOC2 certification is becoming a requirement for those providing services to larger financial institutions.

Thank you and I'll now pass it back to Dave.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Okay. Thank you, Keith. Once again, thanks for making the time to be on the call with us. At this time, I'd like to open up the call to questions. And if you have future questions after the call, please feel free to reach out to Brendan Hopkins which is bhopkins@quotemedia.com. We need our person on the phone to go to question - question period.

Brendan Hopkins - Investor Relations

Chelsea?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Okay. We're going to have to wait I guess. We're ready for questions. Chelsea, are you there? I guess, we're going to have just keep pounding her. Chelsea? Sorry, everybody. We don't have control over the phone lines, so we can't handle it.

Question & Answers

Brendan Hopkins - Investor Relations

I can throw one up there now for now Dave. I know people are going to want to - whatever more color you can put on to be the new big clients and Keith had mentioned they are higher margin than usual. Can you get any anymore color there and then maybe on as to going forward is it going to be higher margin consistently forever or is it during this sort of build-out phase? And then we could just get a little more of there, if you can share anymore.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Sure. You'll start the questions, I guess, sounds good. Yeah, well, the larger clients. Yeah, the margin obviously is tremendously higher because we don't have a lot of fees that our - exchange fees and things like that. The margins just improve over time, especially in - after the build outs and then going into the first year of the full contract of full launch of products and everything to all users. So we're looking at really, really good margins on the product lines and consistent growth and even ramp up over the years. But it's - a large client, people often asking, what is a large client and large clients are in the seven figure mark per year, maybe even $2 million a year. So we're trying, obviously we're always after the bigger and bigger clients and there's always a lot of smaller clients to come and we close and things are going great. But it's these bigger ones that are $0.5 million a year up to $2 million a year kind of thing is really good for us. And margin also depends on what they take or how much we have to do all the exchange fees and things like that. But so far, these last two big ones that we are just signing now, we're not doing the pass-through of the exchange fees. So it's actually not part of our agreement, so that's good. That means lots of margin for us.

Brendan Hopkins - Investor Relations

Okay. Chelsea?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Chelsea, are you there?

Operator

[Operator Instructions] And will take our first question from Michael Kupinski. Your line is now open.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Thank you. Congratulations on a solid quarter, by the way, and a solid year. Just wanted to ask a couple of questions here regarding the - you mentioned about the gross margins. Can you give us a sense of where the gross margins might be as you kind of go into 2022? You kind of highlighted the fact that these - the margin should improve. So can you give us some thoughts about that?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Keith, do you want to take that?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Yeah. I'm expecting our margins to be in the 48% for the upcoming year up from 44% this year.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Okay. And then you gave us some sense of what the two clients are in terms of revenues. Can you kind of give us a sense of what you're seeing in general in terms of your current clients? Any perspective churn there that you might - that we might think of in this environment or are you just only seeing a more positive and constructive tone to the environment in that you might even be conservative in terms of your 22% growth in revenues for this year?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Well, again another large customer comes along that would skew our results. So I factored in the revenue from the two new contracts we've recently signed, but I haven't - beyond that - and there is another significant contract expected towards the end of this year. But beyond that, I haven't factored in any large contracts. So, anything significant would skew the numbers higher.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Dave did you anticipate the other contract in your guidance for - the 22% revenue growth that other contract for the end of the year? Is that factored in as well or just the two that you have signed now?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Yeah, I've just factored in the two large ones for now.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

And Keith, I was wondering if you can give us a sense in terms of your adjusted EBITDA margin for 2021 was about 11%. Would you anticipate given the higher margin business here, what do you anticipate your adjusted EBITDA margin range to be?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Well, I haven't actually calculated that figure for - in my projection but obviously, well, it will significantly improve as we expect our bottom line to improve. So Adjusted EBITDA will probably improve by same percentage.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Got you. And going back to the revenues one more time. Your interactive content and data application revenue showed a significant drop, which you indicated that carries higher margins. Can you can give us a sense of the trend line for that line item as you go into 2022?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Well, maybe Dave can handle that. But honestly, it's just - it's hard to predict which customers are going to go through the door. And it's not necessarily like it's not a given across the board that a customer in one revenue line item will have higher or lower margins. It's more of a generalization, so I can't really predict that per se.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

And the wins that you're talking about were in the Corporate Quotestream area, correct? I just want to clarify.

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Yeah, well, we're still trying to, because there is pretty broad product lines, so we haven't really classified that revenue yet, so.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Okay. So you're not telling us or telecasting whether or not that's going to be in the corporate, or it might even be an interactive content?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Yeah, or it could be split between the two of them. We haven't made that determination yet.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Got you. And in the past Dave, you kind of gave us some thoughts in terms of ongoing investments, product enhancements and things like that. In 2022 are those largely going to decelerate in terms of the expenses versus 2021? Are you still ramping up and still likely to spend as much as you did in 2021 in terms of new product enhancements and things like that?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Yeah, I think our goal is to kind of keep a - kind of almost like a flat spend, not increasing our spending. We still have a lot of growth areas but it's kind of like we've got our budget for spend, we want to just keep that budget for spend and I think that's going to be our focus going forward rather than - it's not about decreasing because we want to actually go after other areas of the market, other datasets, other things. And we have those teams available to us now, so the spend is mostly people, right, that's our spend. And so it's just kind of consistently keeping that. We'll probably have some increase of some spend, but that will be more salespeople, more marketing people, things like that. But as far as data collection and product development and things like that, we've got a very good team for that and we're just going to keep creating more products.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

And Dave, sorry.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

I just remembered you also had mentioned something that we didn't address, you were asking about attrition or clients that leave things like that and I don't think we've seen much of that. So you were curious if COVID had caused that? Obviously, in the early days of COVID there were a few firms that struggled but that's - it seems like everything is pretty stable these days, and we haven't really seen much as far as companies leaving. So we've got a very, very high retention rate.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

And Dave, you're talking about hiring people and so forth. Can you just talk about how many FTEs you currently have, how many salespeople you currently have. And then in terms of what your hiring plans might be for the balance of this year in terms of sales and so forth?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Yeah. Full-time employees I think we've got, we're approaching the 100 mark, salespeople probably around I would say 10 to a dozen. We've got some plans to expand that into some other cities, try to get people into other locations because it is nice to do face to face even though it's been tough over the last few years. But, yeah, so that's kind of our numbers of people. And then we also have contract employees and contract development work and we've got a team in India. So we've got another, call it 50 people. So they kind of - the team of QuoteMedia, I would call it around 150 people, but full-time employees is around 100.

Michael Kupinski - Noble Capital Markets, Inc. - Analyst

Perfect. All right, that's all I have. Thank you.

Operator

We will take our next question from Richard Hochskins [Phonetic]. Your line is now open.

Richard Hochskins - - Analyst

Hi, Dave. Congratulations on your year. I have one question. What is the earnings per share right now?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Keith, do you want to, I don't know. Keith?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Yeah. Well it's positive, it's - you round down, it was zero per share but - I just don't want to quota a bad number. Yeah, it worked out to be zero because it just - couldn't work down the numbers.

Richard Hochskins - - Analyst

Okay. There has been talk that Dave you would sell the company at a certain situation. Is that true, and if so when would that happen?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Well, I don't know if I said that, but I think the question in the past was are companies coming to us and are we getting offers. And the answer is yes. There is always firms coming to us and pitching this or that or whatever. And everything's for sale, of course, at some point, but we're very, very happy with our growth. And because of that, it's not like it's something we're jumping up and down trying to do. We're heads down, growing, closing deals and etc, but I'm always open to talks. And if something like that comes along and something gets to the point where it's worth presenting to shareholders then we would obviously do that.

Richard Hochskins - - Analyst

Okay. Thank you.

Operator

[Operator Instructions] We'll take our next question from Dean Avarmani [Phonetic]. Your line is open.

Dean Avarmani - - Analyst

Hi guys. Great year and I'm glad to see there is good guidance for the coming year. I guess, Michael asked most of my questions. But I want to go back to a minor one. You guys touched on the hiring you plan on doing and that employees you have. I'm wondering if with the current labor shortage going on throughout the country, if you experienced any turnover issues or hiring problems? Because I know maybe it was a year and a half, two years ago you also scaled up the hiring with your salespeople. I know it takes long time to train them and get them ready to really get the full potential out of them. So I'm wondering if you're running into any of that?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

It's tougher. Obviously, it's a very competitive market as far as all areas of our business go. We're a technology company and there is a lot of competition in the technology market. We actually found that it was probably premature to over-hire in the sales area, simply because of COVID, the lack of ability to properly train or to have people do the face to face, which is kind of where it's kind of nice to do that. So we did have some hiring going and kind of slowed it down until it kind of the world opened up a little bit more.

So I think probably we're looking at more hiring this year as far as sales goes, but we're doing very well, and I just want to get some more people in some other locations as well. Continue to just get our name out there and obviously the other thing was attending conferences and things like that when there weren't any over the last few years, that's where salespeople can go and handshake with people and get business cards and get the name out there. So it was a little bit tricky in the last couple of years, but I think we're probably looking to do some ramp up this year in some extra salespeople.

Dean Avarmani - - Analyst

It's actually good to hear. Yeah, I guess I don't want to put words in your mouth and I want you to correct me if I'm wrong. I guess the logic here is that, you obviously have a product that clients want. You just want to - landed two big contracts and you replaced some bigger competitors. So if you guys went on a hiring spree and maybe what's missing right now is just the sales people to go and get those growth numbers up. That's where I'm from my perspective, but maybe at certain point doesn't really scale, but maybe - anyway those are my thoughts.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

You're right. I mean, you're right to an extent but a lot of firms do know us and this is actually going to just the announcing of these and we keep saying two deals. There is actually about six deals that are fairly large that we signed. Two are the biggest firms and then there is four others that we've also signed. So it's - we're doing well. Sales are doing well. It's more about getting the word out there, having the trust in the industry. Having these big firms say, okay, they're SOC2 compliant, there now - we can now go away from the incumbents.

There is three or four large, large incumbents in the industry as we all know, multibillion dollar firms that we're competing against. And we're now at the table with those. And it's not necessarily how many sales people we have. We are talking to a lot of firms about deals now and it's about handling also all the incoming and all the companies that we're working with. There is a lot of request for proposals or documents that we have to fill out and things like that that we have to get going. It's very tough in this industry now. Just the whole compliance thing has gone through the roof in the last few years.

So when a company comes to us and they want to spend $0.5 million or $1 million a year, the first thing they do is send us a 300-page questionnaire that everybody has to - all compliance has to fill out everything. It's very expensive to do. It takes a lot of key people in our company to do all of this. We've got all of these different security measures we go through, etc, etc. Very hard for other firms to move into our market. It's not an easy thing to do and especially in the last few years it's gone a little bit crazy with all of that but understandably.

But the - yeah, we're busy. We just need more salespeople also just to handle all the clients and then actually get our - continue to poke at companies that are under contract and they're either renewing in a year or don't - we don't want them to renew in a year, that type of thing. So just keep our name out there and make sure everybody knows that we have the alternative solution, maybe a better solution and maybe even a less expensive solution.

Dean Avarmani - - Analyst

Yeah, definitely. I think I want to - I have one more question and then a comment. Maybe you've touched on this before, but in terms of the two big clients of the contract. These are significant - are going to be significant portions of your revenue it sounds like and with that comes the risk of customer concentration. I'm just wondering if there is - when they are up for renewal or how long these contracts are for?

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Usually the bigger contracts are up to five years. So five-year agreements, maybe four and possibly even three. But typically they're not the annuals, so these large agreements nobody wants. There is so much that's we're providing across the board that it's usually I would, well, I mean I think our largest one is five years. I can't remember if the other one is four years, that type of thing. So three to five is our typical for large, large contracts.

Dean Avarmani - - Analyst

Okay. And one last comment and that is - I know you get questions on this call about selling the company almost every quarterly call. And I'm not opposed to that at the right price and I'm happy you guys are diligent and take your time because I think thank you guys are undervalued. And I think I like the trajectory where it's going. And I'd be happy to hold - if you guys keep executing I'd be happy to hold your stock for the next decade. So if you want to sell, sell at the right price but I don't think you guys should be in any rush. And I'm happy you guys aren't and that's all I got.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

No, that's true. Absolutely, yeah. Thank you.

Dean Avarmani - - Analyst

Thank you.

Operator

Thank you. We have no further questions on the line at this time. I will turn the program back over to our presenters for any additional or closing remarks. I'd like to do a couple of questions that queued up. We'll take our next question from Richard Walker [Phonetic]. Your line is open.

Richard Walker - - Analyst

Thank you. Guys, appreciate your time today. Quick question on the stock, while we're talking about it. Any thoughts about uplifting it so we can get you a little bit more exposure, a little bit more volume going on a daily basis.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Yeah, certainly that's - obviously, we've been discussing that over the last year. We have to hit some targets. We have to hit some requirements, all these different things to uplift but it is definitely on our radar. And it's something that we're looking at. And when the timing is right we're most likely going to do that.

Richard Walker - - Analyst

Okay, I appreciate that. It's just a shame that you guys are trading it basically one times sales. Hopefully we'll get there - lot higher number in the future.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Yeah. No, absolutely. Thanks for your question.

Operator

[Operator Instructions] And we will take our next question from Michael Cole [Phonetic]. Your line is open.

Michael Cole - - Analyst

Yes, good afternoon. Pretty impressed with the company's financials in this past year. I was curious to know if there was any comment about the telecommunications broadband pricing in your data throughputs from Canada and Mexico as a comparative advantage in your services in the next year.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

I don't even know how to answer that. I. I don't think that there is much effect on us as far as that goes. And it's very minimal as far as what we're doing and what we're using as far as broadband. So I say that's a negligible thing to us. Does that?

Keith J. Randall - President, Chief Executive Officer and Chief Financial Officer, QuoteMedia Inc.

Yeah, it's a pretty small percentage of our costs, that's for sure.

Michael Cole - - Analyst

So the actual data networks that rely on more and more uptime all night or all day, that has not been a question in the sales pitch for clients that are trying to buy a higher end product.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

No, because we already have full redundancy in three different ticker plants and data centers that are all cross redundant and so, an increase in some communication costs of a little bit - it's such a small amount of what we spend in the big picture. So that's why it's just - it doesn't really mean too much. But yeah, we've got a very good network. We've got data centers. We use the cloud. We have so many different ways of delivering and receiving data that it's all very, very redundant and it has to be redundant in order for all of these firms to go with us. So we had to put all of that in place years ago. All good?

Michael Cole - - Analyst

That's all good. That's all I had. Thank you.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Okay.

Operator

And it appears there are no further questions on the line at this time. I will turn the program back over to our presenters for any additional or closing remarks.

Dave Shworan - Director and President, Chief Executive Officer, QuoteMedia Ltd.

Okay, thanks so much. Thanks for hanging in there during the dead period. But yeah, so I'll just wrap things up. Really happy about our year. Looking forward to this next year. Obviously, we've got so much on the go. It's insane but that's good. But if you have any more questions we're always open to talk. I'm always open to talk and looking forward to a really good year. Also, if you have - if you want to reach out to Brendan Hopkins, he handles our IR stuff. Brendan Hopkins is bhopkins@quotemedia.com and then he can link us up. Thank you so much everybody. Have a great day.

Operator

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Q4 2021

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