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Operator: Good day everyone and welcome to the 2022 Annual Results. It is now my pleasure to turn the call over to Brendan Hopkins. Please go ahead.

Brendan Hopkins: Thank you, everyone, for joining us. 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 forecasted results. With that said, I would like to turn the call over to Dave Shworan, CEO of QuoteMedia.

Dave Shworan: Thanks Brendan. Welcome, everybody and thank you for joining us to discuss our 2022 year-end results. As I’m sure you all read in our filings, we had a terrific year in 2022 and I’m pleased to report that we achieved a 16% increase in revenue over 2021. Our revenue grew by $2.3 million, taking our top line to $17.5 million for the year. And this growth curve is continuing as more and more firms choose QuoteMedia for their market data needs. In addition, our EBITDA improved by over $1 million last year, resulting in an EBITDA of $2.7 million for the year. As I have mentioned on previous calls, we had several large firms signed with QuoteMedia. We developed a product for them and started launching services to their customers in 2022.

We continue to roll out products and services for various contracts already signed but we also are incredibly busy with additional firms discussing the opportunities for us to take over their market data and research provisioning. The trend that we’re seeing now is that many firms are recognizing us as a top-tier provider and an excellent alternative to replace older incumbents with antiquated data delivery and old looking displays. QuoteMedia certainly shines when it comes to modern and attractive product offerings. The other trend that we’re seeing is that our new products and data sets are becoming more and more popular with our clients. The expansion of our services to include our new analytics, metrics and scoring systems, our new market research services and reports, new proprietary data sets and ever-growing financial applications and web services are definitely gaining popularity.

Many firms choose us because we’re continuing to grow in all of these areas. 2022 was an excellent year. and we’re on track to have a very successful 2023 as well. At this point, I’d like to turn over the mic to Keith Randall, who will take us through the numbers and then we can open up the call to questions.

Keith Randall: Thank you, Dave and welcome, everyone. I’ll now start with the income statement. Note that all comparisons are on a year-over-year basis unless otherwise noted. Overall, we had a great year with a 16% increase in total revenue and a significant improvement in net income. Our new products continue to gain traction in the market which has allowed us to attract some large customers – to attract the large customers we recently signed. Breaking down our revenue. Our total Quotestream revenue increased by 4% due to the 8% increase in corporate Quotestream revenue. This is primarily due to the contracts signed during the year with 2 large Canadian banks, the second of which started in November. Our individual Quotestream revenue decreased by 8%, due to a decrease in subscribers and the devaluation of the Canadian dollar as approximately 50% of our individual Quotestream revenue is earned in Canadian dollars.

Interactive content revenue which is web display content, increased 31%, mainly due to an increase in the number and size of our customer base and in particular, the contract signed with the large Canadian banks previously mentioned. Our cost of revenue consists of fixed and variable stock exchange fees and other data costs and amortization of capitalized development costs. Our cost of revenue increased 6% for the year, mainly due to increased amortization expense associated with capitalized costs related to improving infrastructure new product development, data collection and the expansion of our global market coverage. Overall, our cost of revenue decreased as a percentage of sales increasing our gross margin percentage to 49% from 44% in 2021.

The improvement is mainly due to the higher gross margins associated with the new contracts signed during the year. Our total operating expenses increased 19% for the year. Most of the increase relates to improvements made to our infrastructure, security and business continuity management. And in particular, the costs associated with obtaining SOC 2 Type 2 certification which we achieved in November. SOC 2 certification provides independent assurance that an organization maintains a high level of information security and has controls in place to ensure business continuity. Sales and marketing expenses increased 18% and development expenses increased 22%, primarily due to additional personnel hired to achieve our expansion objectives. G&A expenses increased 19%, primarily due to increased personnel costs and software expenses related to the SOC2 certification process.

Our net income for the year was $444,000 compared to $212,000 in the comparative year, an increase of $232,000. Our adjusted EBITDA was $2.7 million compared to $1.6 million in the prior year, an improvement of $1.1 million. 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 $478,000 at year-end which was a $219,000 increase from 2021. Our net cash flow from operations was $3.1 million, while net cash used in investing activities was $2.9 million, primarily due to spending on infrastructure and product development. Looking forward to 2023, based on revenue already under contract and new opportunities currently in the discussion phase, we expect to meet or exceed our 2022 revenue growth and significantly approve our net income.

Thank you. And I’ll now pass it back to Dave.

Dave Shworan: 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 any questions.

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Operator: We’ll take our first question from (ph).

Unidentified Analyst: Looks like a great year overall, congratulations on that. A couple of questions. And you kind of already touched on the operating expenses going up overall 19% which is outpacing revenue growth a little bit and I understand the reasons why. How do you see that normalizing in the year and hopefully, beyond this year, they’re going to come back down. Is there any percentage we could put on that in the future? Do you feel like you have enough people at this point? And if I can just sneak in another concern or question is for the future, what do you guys see as your biggest challenge, the biggest concern?

Dave Shworan: While I do think that we are going to have improvement in that area. And Keith, maybe you can address some of that as far as — we did have some increased spending. We also have additional work that we’re doing to decrease costs over time with third-party data and things like that. So those are some things we’re working on. But I think we all — we are going to continue to grow. So I can’t say that we’ve got enough people in order to do this as we get bigger and bigger and bigger, of course. But we do have some pretty good teams in place now. We’ve established a pretty good kind of core group that runs everything management level, etcetera. One thing we have noticed, though, is that it is becoming more expensive for people.

I think in the entire tech industry, there was a pretty good surge of costs going – costs to hire and things like that, finding people, we’re noticing that there is a big change in the industry. So Keith, do you want to answer that and then we can get to question two.

Keith Randall: Yes. I mean we — for 2023, we’re expecting our revenues — revenue growth to exceed our operating expense growth to answer your question. So we expect some of those costs to normalize. There’s a few sort of unusual costs this year, nonrecurring costs. So we do expect that number to be below our revenue growth for 2023.

Dave Shworan: Okay. And then the second question was to what hurdles do we find or things that we’ll run into in growing. And I don’t think that we have a lot of hurdles. We’ve done very well. The last few years has been — has proven to us that we’ve actually been able to overcome a lot of hurdles. Obviously, with COVID was one but also just the amount of new products, new data sets, new things that we had to deliver as well as the large clients that we signed in having to construct all of their products, merge with all of their systems and release everything. I think we’ve done very, very well. And as a team, I think that I’m very proud of the company and everybody that’s been involved in all of it, we’ve succeeded. Clients are happy.

But I guess that’s the thing is if we get too many clients, then that makes it pretty tough to create everything that people are looking for but that’s growth. And I actually hope that, that happens. I hope that, that becomes the hurdle that we have to overcome. Thanks for your question.

Operator: We’ll take our next question from (ph).

Unidentified Analyst: I have a couple here. If you go back to OpEx, you guys said you had some extra expenses this year just because of the SOC 2 certification. I’m wondering, are these ongoing expenses or were these onetime payments just to get the certification? And can you tell us about how much were they, how much they affect your operating expenses exactly?

Keith Randall: I can answer your question. So there is an ongoing process of SOC 2 certification because we’re doing the SOC 2 Type 2 which is basically, we need to maintain it every year. It’s not just a point in time. But the initial process is really the — is the most cost-intensive part just getting — like getting up to speed and hiring consultants to advise us on where our gaps are. So going through the process a second time will be a lot easier and a lot more cost effective. We — I mean, during the year, we had to hire personnel specifically for that to achieve that objective. So if you want to know the numbers, we’re talking hundreds of thousands of dollars to achieve it.

Unidentified Analyst: Okay. But ongoing, it won’t be hundreds of thousands dollars, some lower amount. Okay. And then — sorry, continue.

Keith Randall: No, I’m just saying hundreds of thousands like — I mean I’d have to go — I mean it’s hard to pinpoint just exactly what related to SOC 2 or just what related to infrastructure in general. But going forward, the cost will be significantly less.

Unidentified Analyst: Okay. And then you guys also gave a presentation at the beginning of December, I think it was on Microcap Club. I can’t remember exactly where you had a chart — a couple of charts there that showed for 2023, I think it was a little over $20 million in revenue and a little over $2 million in net income. I don’t know, you guys still stand behind these numbers because if I do some quick math and I don’t assume a huge jump in margins, it tells me that OpEx would basically have to be flat to get that kind of profitability. Is it something that’s possible or achievable? Or am I missing something critical?

Dave Shworan: Well, I can answer the question. I guess in showing the growth curves of QuoteMedia and showing the curves going forward into the future, those are just curves, right, looking at that. They’re not really put on the screen as projections. There’s no numbers on them to say, “Hey, this is the number that we’re projecting and things like that. But it’s just to show the trend and the curve of what’s happening with the company. And it’s just after year after year, we can kind of see what’s happening. We can see the types of clients that are coming to the table. We can see the kind of deals that we’re doing. And we do feel that, that curve is pretty accurate. And even if bigger clients come along or more of them come along well the curve actually climbs.

So don’t read into it too much and don’t sit there and pinpoint on the chart. It’s more of just showing the curve of the growth of the company. Keith, do you want to address any of that for or 2023, just even contracts under that we’ve already signed for the year?

Keith Randall: Sure. Yes. So — but to circle back to some of those figures, maybe that net income would be a little bit optimistic but we do — we are expecting a significant increase in our net income figure. So — so — but I don’t have the presentation right in front of me, so I can’t comment exactly on the other numbers related to it. But we are expecting $20 million plus in revenue this year and our bottom line, there’s a few factors that contribute to that. There’s a few accounting adjustments that can adjust it one way or the other, like noncash accounting adjustments, adjustments to fair value assets or liabilities. So — but having said that, we do expect a significant improvement in net income.

Unidentified Analyst: Okay. And I don’t mean just on critical. I am like a happy investor. So I’m not — I’m very happy with 2022 and everything. So it’s not — I’m just trying to understand certain things. And my last question is, if I look at your publicly traded competitors, the ones that are like much larger than you, their gross margins are typically higher and I’m wondering, is that because they’re charging more? Is that because they’re offering products that you aren’t offering? Or is that something that just comes with scale? Is that — are these margins you could see you approach as you scale up? I’m talking about gross margins? Or is it apples and oranges?

Keith Randall: I’d have to know exactly — sorry, go ahead, Dave.

Dave Shworan: Well, I was just going to say, I mean, obviously, with scale is better margins. I mean the more and more customers you’re serving off of the same data sets and the same servers and all of that, then definitely, that’s a factor. Are they charging more? That could be another factor. So I think you pointed out to, for sure, factors that like we’ve replaced a bunch of these large solutions where we’ve replaced quite a few different vendors in order to take over the market data for a firm. And we’ve actually tried to save them money. They’ve come to us for that reason that they know that they’re overspending. They’re on ancient contracts that are — have ballooned over time. And so maybe we are charging a little bit less but that’s what the clients are looking for in this day and age. You can go ahead, Keith.

Keith Randall: Okay. Yes. No, I would just add that we are expecting our gross margins to improve again this year as we grow. And particularly, we’re finding areas to reduce expenses, developing our own data, for instance and just some of the contracts that we’ve recently signed have higher margins as well. So — so yes, we’re expecting to increase our margins as we grow.

Operator: We will move next with Michael .

Unidentified Analyst: And congratulations on your year. A couple of questions here. I know that there was a ramp phase for the large Canadian bank you signed. Were all of the products that they signed for a fully operational in the quarter or are there more deliverables that could influence revenues in the upcoming quarter?

Dave Shworan: Still being delivered. So it’s — it’s an ongoing project where we’re releasing piece by piece. And so it is — it’s not — nothing is fully released yet.

Unidentified Analyst: Got you. And so you would expect from the revenue growth from that Canadian bank to see further revenue growth year-over-year?

Dave Shworan: Yes.

Unidentified Analyst: Okay. And not driven by pricing but just driven by additional products?

Dave Shworan: Yes, additional products. I mean, once all products are released, then it’s based on usage and then continued growth of other products. Yes.

Unidentified Analyst: Got you. Can you give us a sense maybe some context of the revenue growth. Obviously, interactive content and data applications was a key driver for revenue growth in 2023. I was wondering if you can kind of give us a sense of — was that driven by number of subscribers, price increases, can you just kind of give us a sense of the demand there. And then also in your context of your growth estimate for 2023, are you anticipating that the same trends that we saw in 2022 or the similar revenue trends that you’re expecting in 2023 in terms of your core stream, individual quote stream and your other product categories?

Dave Shworan: Yes. I mean our interactive content solutions is web displays, web development, all of the delivery of all this information across the web for brokerage firms, banks, trading systems, etcetera. So that is the biggest growth area for QuoteMedia. Many firms are coming to us. They want us to create all of their solutions, build their portal, build their trading system, add all of the research in there. We are that one-stop shop for all of that development as well as all of the data. So certainly, our web content solutions is has grown, is continuing to grow and I think is going to be a big part of what we’re doing. The corporate Quotestream is the other side that we’re focused on. So taking our Quotestream products, our Quotestream web, our Quotestream trader, our Quotestream mobile, our Quotestream professional products to firms and taking them to many, many users, whether it’s the retail audience of thousands of users or whether it’s the professional audience or the financial advisers area to hundreds of users in firms.

That’s our other focus. The individual Quotestream is the kind of one-off sign-ups for putting a credit card to get access. We still put some focus on that but our big focus is going after the large, large firms and the big contracts and the big partnerships.

Unidentified Analyst: Got you. And as we see the margin improved in the quarter, a significant improvement. Can we just talk a little bit about — is that just solely related to the revenue mix? Or is there a function of other things that are happening that might — to account for the margin improvement? And then if you could just give us a sense of what you think are sustainable margins as we go into 2023?

Dave Shworan: Keith, do you want to talk about margins?

Keith Randall: Yes. I think in 2022, most of the improvement in gross margin was due to the growth — the new contracts we started that had higher gross margins. Now the second large contract with the bank only started in November, so we didn’t really get that the impact or much of the impact of that contract. So I’m expecting the margins again to improve in the next year, not only because of the revenue mix but also we’re finding areas where we can replace data providers or reduce our data costs, so which will — the cost of revenue. So that will also improve our margins. So the combination of those 2 factors, we’re expecting our margins to be in the 52% to 53% range for 2023.

Dave Shworan: Yes. I think I’ll also add that the new companies that are coming to us, we’re meeting with quite a few more firms now, they’re all coming to us with similar models and similar data requirements and products that they want. So it looks like it’s going to be a continuation of this trend.

Unidentified Analyst: Got you. And then I was just wondering if you can give us a sense of the current business environment, particularly you mentioned in the past that when things kind of get a little rough, you think that this is when your company is going to shine because companies look for customized solutions that might be a little cheaper. And I know that you went through a period of investments in 2020 and 2021 so that you can offer a number of data sets and feature sets. Do you feel like you have all of the solutions that you need? Or are there continued investments that need to be made? I’m just trying to get a sense of the prospect that we go through another wave of investments that might crimp margins in the future? And then if you could just talk a little bit about, again, going back to the business climate, what you’re seeing out there right now?

Dave Shworan: So no, we’ve actually done very well. We spent probably 3 years on new data sets, new data on data, so more analytics and extra data sets, things like that. going out there and sourcing data directly from all kinds of different providers. We do all of our own news. We bring it from every single news provider, etcetera, etcetera. So a lot of this is done. We’re doing all of that. It’s what we’re working on now and especially this year, is continuing to take all of that data into all of our products. So building out more and more products with all of these new data sets. There’s all kinds of things that clients are looking for different screening, different analytics, different alerting systems, all kinds of things like that, our new research reports, for example, so it’s more of the — all the different methods of delivery, not necessarily the collection of the data or the creation of the data anymore. Now it’s the delivery of that data.

Unidentified Analyst: Got you. Well, congratulations again and good luck on 2023.

Operator: And we show no further questions at this time. I will turn the call back over to our presenters for any closing or additional remarks. Actually, my apologies. We do have another question from Richard Walker .

Unidentified Analyst: Sorry, guys. I had to sneak this in real quick. Stock versus stock. You guys are doing the most important thing that you can do, growing the business in a profitable way and I appreciate that. Have you given any thought or had any discussions about finding ways to increase the liquidity of the stock and maybe get the word out there. I know, Dave, you do these conferences and these interviews. And again, they’re much appreciated. I enjoy my watch every one of them but any thoughts on anything else that might be done in the future?

Dave Shworan: I think just continuing with what we’re doing. I mean I am going to conferences, I do have a bunch lined up this year, so I will be doing some more road trips which I didn’t do a lot in the past. But yes, it’s one of these things where it’s most important for me to meet with the clients and do all of those things because that’s where the money is, right? And making sure that we take care of all of these clients is key. I’m really hoping that the stock follow suit and that people recognize our growth and what we’re doing and how we’re establishing ourselves in the industry. And we’ll continue to do what we can for the stock. But it’s — I think we’re kind of looking at it and saying, okay, let’s get to a certain level and then let’s take a look at maybe uplifting.

That’s probably the angle that is when the stock is better to focus on rather than too much right now. I mean doing what we can but going after all the clients is really our primary goal right now.

Operator: And we show no further questions at this time. I will turn the call back to our presenters for any closing or additional remarks.

Dave Shworan: Okay. Well, thank you so much, everybody. I don’t have any more to tell you. We had a great year. And once again, thanks again for taking the time to be on the call with us. And if you have future questions, feel free to reach out to Brendan Hopkins which is bhopkins@qotemedia.com. Thank you so much. Have a great day. Bye-bye.

Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time.