QUOTEMEDIA, INC. 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,
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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.
A key feature of
Business Environment and Trends
While our licensed-based revenue is generally more recurring in nature, the
uncertainty caused by the recent market downturn and rising inflation may result
in some clients to delay purchasing decisions, product and service
implementations or cancel or reduce spending with us. Recent events in the
Approximately 35% of our revenue and expenses are denominated in Canadian
dollars. The Canadian dollar depreciated 4% against the
We finalized contracts with two large multinational financial institutions in
2022, with revenue recognized starting in
Our revenue increased 16% in 2022. We expect similar revenue growth in fiscal 2023 and we expect our 2023 net income to continue to grow. This is mainly due to the new contracts mentioned above as they have significantly higher gross margins than our typical customer contracts have on average.
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Plan of Operation
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 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 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.
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
Management's Discussion and Analysis discusses our financial statements which
have been prepared in accordance with accounting principles generally accepted
in
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.
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Revenue recognition
In accordance with Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), we recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services by applying the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
We exercise judgment in assessing the creditworthiness of our customers and therefore in our determination of whether collectability is reasonably assured. Should changes in conditions cause us to determine that these criteria are not met for future transactions, revenue recognized in future reporting periods could be adversely affected.
Capitalized software costs include costs incurred in connection with the
internal development of software. These costs relate to software used by
subscribers to access, manage and analyze information in the Company's
databases. Capitalized costs associated with internally developed software are
amortized over three years which is their estimated economic life. We exercise
significant judgment in determining that capitalized application software costs
meet the criteria established in
For the years ended
Recent Accounting Pronouncements
Recently Adopted
There are no new recently adopted accounting pronouncements for the year ended
Not Yet Adopted
In
In
Other accounting standards that have been issued by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the Company's consolidated financial
statements upon adoption.
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Results of Operations
Revenue
Years ended December 31
2022 2021 Change ($) Change (%)
Corporate Quotestream $ 6,906,499 $ 6,399,618 $ 506,881 8 %
Individual Quotestream 2,092,778 2,281,966 (189,188 ) (8%)
Total Portfolio Management
Systems 8,999,277 8,681,584 317,693 4 %
Interactive Content and Data
APIs 8,528,328 6,492,788 2,035,540 31 %
Total Licensing Revenue $ 17,527,605 $ 15,174,372 $ 2,353,233 16 %
Total licensing revenue increased 16% when comparing the years ended
Total Portfolio Management System revenue increased by 4% when comparing the
years ended
Corporate Quotestream revenue increased 8% for the year ended
Individual Quotestream revenue decreased 8% for the year ended
Interactive Content and Data APIs revenue increased 31% for the year ended
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Cost of Revenue and Gross Profit Summary
Years ended December 31
2022 2021 Change ($) Change (%)
Cost of revenue $ 8,972,129 $ 8,438,658 $ 533,471 6 %
Gross profit $ 8,555,476 $ 6,735,714 $ 1,819,762 27 %
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.
Our cost of revenue increased 6% for the year ended
Overall, the cost of revenue decreased as a percentage of sales, as evidenced by our gross margin percentage that increased to 49% in 2022 from 44% in 2021. As discussed above in the "Business Environment and Trends" section, we signed contracts with two large multinational financial institutions. These contracts have higher gross margins than our other customer contracts typically have on average, resulting in a significant increase to our gross margin percentage.
Operating Expenses Summary
Years ended December 31
2022 2021 Change ($) Change (%)
Sales and marketing $ 2,952,968 $ 2,507,169 $ 445,799 18 %
General and administrative 3,015,453 2,538,429 477,024 19 %
Software development 2,096,404 1,712,558 383,846 22 %
Total operating expenses $ 8,064,825 $ 6,758,156 $ 1,306,669 19 %
Sales and Marketing
Sales and marketing expenses consist primarily of sales and customer service
salaries, investor relations, travel and advertising expenses. Sales and
marketing expenses increased 18% when comparing the years ended
General and Administrative
General and administrative expenses consist primarily of salaries expense,
office rent, insurance premiums, and professional fees. General and
administrative increased 19% when comparing the years ended
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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 22% for the year ended
We capitalized
Other Income and (Expense) Summary
Years ended December 31,
2022 2021
Foreign exchange gain (loss) $ (40,307 ) $ 107,382
Interest expense (2,818 ) (2,641 )
Other income - 133,257
Total other income and (expenses)
Foreign Exchange Gain (Loss)
We incurred a foreign exchange loss of
Foreign exchange gains and losses arise from the re-measurement of Canadian
dollar monetary assets and liabilities into
Interest Expense
Interest expense relates primarily to the interest expense associated with our
finance leases and was relatively unchanged from the comparative periods.
Interest expense of
Other Income
There was no other income for the year ended
Provision for Income Taxes
In 2022, the Company recorded Canadian income tax expense of
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Net Income for the Period
As a result of the foregoing, net income for the year 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. However, to implement our business plan may require additional financing. Additional financings may come from future equity or debt offerings that could result in dilution to our stockholders. Further, current adverse capital and credit market conditions could limit our access to capital. We may be unable to raise capital or bear an unattractive cost of capital that could reduce our financial flexibility.
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.
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