QUOTEMEDIA, INC. The following discussion should be read in conjunction with our financial
statements and notes thereto included elsewhere in this report. We caution
readers regarding certain forward looking statements in the following
discussion, elsewhere in this report, and in any other statements, made by, or
on behalf of our company, whether or not in future filings with the
We disclaim any obligation to update forward-looking statements. All references
to "we", "our", "us", or "QuoteMedia" refer to
This report should be read in conjunction with our Form 10-K for the fiscal year
ended
Overview
We are a developer of financial software and a distributor of market data and research information to online brokerages, clearing firms, banks, media properties, public companies and financial service corporations worldwide. Through the aggregation of information from many direct data, news, and research sources; we offer a comprehensive range of solutions for all market-related information provisioning requirements.
We have three general product lines: Interactive Content and Data APIs, Data Feed Services, and Portfolio Management Systems. For financial reporting purposes, our product categories share similar economic characteristics and share costs; therefore, they are combined into one reporting segment.
Our Interactive Content and Data APIs consist of a suite of software applications that provide publicly traded company and market information to corporate clients via the Internet. Products include stock market quotes, fundamentals, historical and interactive charts, company news, filings, option chains, insider transactions, corporate financials, corporate profiles, screeners, market research information, investor relations provisions, level II, watch lists, and real-time quotes. All of our content solutions are completely customizable and embed directly into client Web pages for seamless integration with existing content. We are continuing to develop and launch new modules of QModTM, our new proprietary Web delivery system. QMod was created for secure market data provisioning as well as ease of integration and unlimited customization. Additionally, QMod delivers search engine optimized (SEO) ready responsive content designed to adapt on the fly when rendered on mobile devices or standard Web pages - automatically resizing and reformatting to fit the device on which it is displayed.
Our Data Feed Services consist of raw streaming real-time market data delivered
over the Internet or via dedicated telecommunication lines. We provide
supplemental fundamental, historical, and analytical data, keyed to the same
symbology, which provides a complete market data solution offered to our
customers. Currently,
Our Portfolio Management Systems consist of QuotestreamTM, Quotestream Mobile, Quotestream Professional, and our Web Portfolio Management systems. Quotestream Desktop is an Internet-based streaming online portfolio management system that delivers real-time and delayed market data to both consumer and corporate markets. Quotestream has been designed for syndication and private branding by brokerage, banking, and Web portal companies. Quotestream's enhanced features and functionality - most notably tick-by-tick true streaming data, significantly enhanced charting features, and a broad range of additional research and analytical content and functionality - offer a professional-level experience to nonprofessional users.
Quotestream Professional is specifically designed for use by financial services professionals, offering exceptional coverage and functionality at extremely aggressive pricing. Quotestream Professional features broad market coverage, reliability, complete flexibility, ultra-low-latency tick-by-tick data, as well as completely customizable screens, advanced charting, comprehensive technical analysis, news and research data.
Quotestream Mobile is a true companion product to the Quotestream desktop products (Quotestream and Quotestream Professional) - any changes made to portfolios in either the desktop or mobile application are automatically reflected in the other.
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A key feature of
Business Environment and Trends
The global financial markets experienced extreme volatility and disruption over
the past couple years due to the COVID-19 pandemic. While global financial
markets are recovering, risk still exists; therefore, we will continue to
closely monitor the impact of the COVID-19 pandemic on all aspects of our
business, including how it will impact team members, customers, suppliers, and
global markets. Most of our employees, particularly in
Recent events in the
Approximately 34% of our revenue and 35% of our expenses are denominated in
Canadian dollars. The Canadian dollar depreciated 4% and 3% when comparing
average exchange rates for the three and nine months ended
In 2022, we finalized contracts with two large multinational financial
institutions. This first contract was effective
In our
Plan of Operation
For the remainder of 2022 and for 2023 we plan to continue to expand our product lines and improve our infrastructure. We plan to continue to add more features and data to our existing products and release newer versions with improved performance and flexibility for client integration. This expansion is expected to result in both increased revenue and costs for fiscal 2022 and 2023.
We will maintain our focus on marketing Quotestream for deployments by brokerage firms to their retail clients and continue our expansion into the investment professional market with Quotestream Professional. We also plan to continue the growth of our Data Feed Services client base, particularly through the addition of major new international data feed coverage, as well as new data delivery products.
Important development projects for the remainder of 2022 and 2023 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news, video feeds, expansion of fixed-income coverage, and the introduction of several new and upgraded market information products.
New deployments of our trade integration capabilities, which allow our Quotestream applications to interact with our brokerage clients' back-end trade execution and reporting platforms (enabling on-the-fly trade execution and tracking of holdings) are underway and will continue to be a priority in the coming year.
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We are also creating new proprietary data sets, analytics, and scoring
mechanisms. We are now aggregating data direct from the sources to produce data
sets that are proprietary to
Opportunistically, efforts will be made to evaluate and pursue the development of additional new products that may eventually be commercialized by our company. Although not currently anticipated, we may require additional capital to execute our proposed plan of operation. There can be no assurance that such additional capital will be available to our company on commercially reasonable terms or at all.
Our future performance will be subject to a number of business factors, including those beyond our control, such as a continuation of market uncertainty and evolving industry needs and preferences, as well as the level of competition and our ability to continue to successfully market our products and technology. There can be no assurance that we will be able to successfully implement our marketing strategy, continue our revenue growth, or maintain profitable operations.
Critical Accounting Policies and Estimates
Critical Accounting Policies and Estimates
In the 2021 Annual Report, we disclose our critical accounting policies and
estimates upon which our financial statements are derived. There have been no
material changes to these policies since
Results of Operations Revenue Three-months ended September 30, 2022 2021 Change ($) Change (%) Corporate Quotestream$ 1,708,627 $ 1,665,555 $ 43,072 3 % Individual Quotestream 512,142 571,201 (59,059 ) (10 %) Total Portfolio Management (1 Systems 2,220,769 2,236,756 (15,987 ) %) Interactive Content and Data APIs 2,169,898 1,581,957 587,941 37 % Total subscription revenue$ 4,390,667 $ 3,818,713 $ 571,954 15 % Nine-months ended September 30, 2022 2021 Change ($) Change (%) Corporate Quotestream$ 5,146,298 $ 4,754,698 $ 391,600 8 % Individual Quotestream 1,606,133 1,725,404 (119,271 ) (7 %) Total Portfolio Management Systems 6,752,431 6,480,102 272,329 4 % Interactive Content and Data APIs 6,200,989 4,777,847 1,423,142 30 % Total subscription revenue$ 12,953,420 $ 11,257,949 $ 1,695,471 15 %
Total subscription revenue increased 15% when comparing the three and
nine-months ended
Total Portfolio Management Systems revenue decreased 1% for the three months
ended
Corporate Quotestream revenue increased 3% and 8% for the three and nine-months
ended
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Individual Quotestream revenue decreased 10% and 7% for the three and
nine-months ended
Interactive Content and Data APIs revenue increased 37% and 30% when comparing
the three and nine-months ended
Cost of Revenue and Gross Profit Summary
Three-months ended September 30, 2022 2021 Change ($) Change (%) Cost of revenue$ 2,096,773 $ 2,033,020 $ 63,753 3 % Gross profit$ 2,293,894 $ 1,785,693 $ 508,201 28 % Gross margin % 52 % 47 % Nine-months ended September 30, 2022 2021 Change ($) Change (%) Cost of revenue$ 6,599,396 $ 6,283,017 $ 316,379 5 % Gross profit$ 6,354,024 $ 4,974,932 $ 1,379,092 28 % Gross margin % 49 % 44 %
Our cost of revenue consists of fixed and variable stock exchange fees and data feed provisioning costs. Cost of revenue also includes amortization of capitalized internal-use software costs. We capitalize the costs associated with developing new products during the application development stage.
As a result of a major growth initiative, which included investing in
infrastructure, new product development, data collection, and the expansion of
our global market coverage, our cost of revenue increased 3% and 5% for the
three and nine-months ended
Overall, the cost of revenue decreased as a percentage of sales, as evidenced by
our gross margin percentage that increased to 52% and 49% for the three and
nine-months ended
Operating Expenses Summary
Three-months ended September 30, 2022 2021 Change ($) Change (%) Sales and marketing$ 784,094 $ 623,821 $ 160,273 26 % General and administrative 757,318 650,191 107,127 16 % Software development 544,525 411,137 133,388 32 % Total operating expenses$ 2,085,937 $ 1,685,149 $ 400,788 24 % Nine-months ended September 30, 2022 2021 Change ($) Change (%) Sales and marketing$ 2,276,526 $ 1,882,807 $ 393,719 21 % General and administrative 2,213,189 1,943,162 270,027 14 % Software development 1,549,454 1,257,470 291,984 23 % Total operating expenses$ 6,039,169 $ 5,083,439 $ 955,730 19 % 20 Table of Contents Sales and Marketing
Sales and marketing consist primarily of sales and customer service salaries,
investor relations, travel and advertising expenses. Sales and marketing
expenses increased 26% and 21% for the three and nine-months ended
General and Administrative
General and administrative expenses consist primarily of salaries expense,
office rent, insurance premiums, and professional fees. General and
administrative expenses increased 16% and 14% for the three and nine-months
ended
Software Development
Software development expenses consist primarily of costs associated with the design, programming, and testing of our software applications during the preliminary project stage. Software development expenses also include costs incurred to maintain our software applications.
Software development expenses increased 32% and 23% for the three and
nine-months ended
We capitalized
Other Income and (Expense) Summary
Three-months ended
Foreign exchange gain$ 102,327 $ 55,278 Interest income (expense), net 10 (101 ) Total other income, net$ 102,337 $ 55,177
Nine-months ended
Foreign exchange gain (loss)
- 133,257
Total other income (expense), net
Foreign Exchange Gain
We incurred a foreign exchange gain of
Interest Income (Expense), Net
Interest expense related primarily to our finance leases is netted against
interest earned on cash balances. Net interest income (expenses) of
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Other Income
There was no other income for the three and nine-months ended
Provision for Income Taxes
For the three and nine-month periods ended
Net Income for the Period
As a result of the foregoing, our net income for the three and nine-month
periods ended
Liquidity and Capital Resources
Our cash totaled
We typically operate with a working capital deficit. As of
Based on the factors discussed above, we believe that our cash on hand and cash
generated from operations will be sufficient to fund our current operations for
at least the next 12 months through
Our long-term liquidity requirements will depend on many factors, including the rate at which we expand our business and whether we do so internally or through acquisitions. To the extent that the funds generated from operations are insufficient to fund our activities in the long term, we may be required to raise additional funds through public or private financing. No assurance can be given that additional financing will be available or that, if it is available, it will be on terms acceptable to us.
Preferred Stock Redemption Rights
At
Foreign Exchange Risk
Currently, approximately 34% of our consolidated revenue and 35% percent of our consolidated expenses are denominated in Canadian dollars. Since currently our Canadian dollar revenue and expenses are closely matched, our consolidated cashflows are not significantly impacted by foreign exchange fluctuations. Looking forward however, based on the new contracts discussed above in the "Business Environment and Trends" section, we expect our Canadian dollar revenue to exceed expenses therefore our consolidated cashflows may be impacted by foreign exchange fluctuations.
Off-Balance Sheet Arrangements
At
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