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 Applications, 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 Applications 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, and 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 year due to 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
While our licensed-based revenue is generally more recurring in nature, the uncertainty caused by the COVID-19 pandemic had led some clients to delay purchasing decisions, product and service implementations or cancel or reduce spending with in 2020. While the impact of COVID-19 appears to be diminishing, we are focused on maintaining a strong balance sheet and liquidity position and will continue to closely monitor the potential impact of COVID-19 and adjust our response going forward as circumstances dictate.
On
Our revenue grew 27% and 24% when comparing the three and six-month periods
ended
Plan of Operation
For the remainder of 2021 and into 2022 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.
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 2021 include broad expansion of data and news coverage, including the addition of a wide array of international exchange data and news and 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
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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 achieve profitable operations.
Critical Accounting Policies and Estimates
In the 2020 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 June 30, 2021 2020 Change ($) Change (%) Corporate Quotestream$ 1,635,071 $ 1,053,218 $ 581,853 55 % Individual Quotestream 591,415 455,492 135,923 30 % Total portfolio management systems 2,226,486 1,508,710 717,776 48 % Interactive content and data applications 1,606,532 1,520,489 86,043 6 % Total subscription revenue$ 3,833,018 $ 3,029,199 $ 803,819 27 % Six-months ended June 30, 2021 2020 Change ($) Change (%) Corporate Quotestream$ 3,089,143 $ 2,030,135 $ 1,059,008 52 % Individual Quotestream 1,154,202 894,126 260,076 29 % Total portfolio management systems 4,243,345 2,924,261 1,319,084 45 % Interactive content and data applications 3,195,891 3,071,522 124,369 4 % Total subscription revenue$ 7,439,236 $ 5,995,783 $ 1,443,453 24 %
Total revenue increased 27% and 24% when comparing the three and six-month
periods ended
Our total Portfolio Management System revenue increased by 48% and 45% when
comparing the three and six-month periods ended
Corporate Quotestream revenue increased 55% and 52% for the three and six-month
periods ended
Individual Quotestream revenue increased 30% and 29% for the three and six-month
periods ended
Interactive Content and Data Application revenue increased 6% and 4% when
comparing the three and six-month periods ended
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Cost of Revenue and Gross Profit Summary
Three-months ended June 30, 2021 2020 Change ($) Change (%) Cost of revenue$ 2,186,357 $ 1,589,190 $ 597,167 38 % Gross profit$ 1,646,661 $ 1,440,009 $ 206,652 14 % Gross margin % 43 % 48 % Six-months ended June 30, 2021 2020 Change ($) Change (%) Cost of revenue$ 4,249,997 $ 3,088,674 $ 1,161,323 38 % Gross profit$ 3,189,239 $ 2,907,109 $ 282,130 10 % Gross margin % 43 % 48 %
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.
We launched a major growth initiative in early 2020, investing in
infrastructure, new product development, data collection, and the expansion of
our global market coverage. As a result, our cost of revenue increased 38% for
the three and six-month periods ended
Overall, the cost of revenue increased as a percentage of sales, as evidenced by
our gross margin percentage that decreased to 43% for the three and six-month
periods ended
Operating Expenses Summary
Three-months ended June 30, 2021 2020 Change ($) Change (%) Sales and marketing$ 620,122 $ 532,061 $ 88,061 17 % General and administrative 685,731 612,693 73,038 12 % Software development 439,045 415,192 23,853 6 % Total operating expenses$ 1,744,898 $ 1,559,946 $ 184,952 12 % Six-months ended June 30, 2021 2020 Change ($) Change (%) Sales and marketing$ 1,258,986 $ 1,049,541 $ 209,445 20 % General and administrative 1,292,971 1,262,746 30,225 2 % Software development 846,333 841,019 5,314 1 % Total operating expenses$ 3,398,290 $ 3,153,306 $ 244,984 8 % 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 by 17% and 20% when comparing the three and six-month periods
ended
General and Administrative
General and administrative expenses consist primarily of salaries expense,
office rent, insurance premiums, and professional fees. General and
administrative expenses remained relatively unchanged from the comparative
periods, increasing 12% and 2% when comparing the three and six-month periods
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 remained relatively unchanged from the comparative
periods, increasing 6% and 1% for the three and six-month periods ended
Other Income and (Expense) Summary
Three-months ended June 30, 2021 2020 Foreign exchange gain (loss)$ 19,880 $ (5,249 ) Interest expense (451 ) (1,191 )
Total other income (expenses), net
Six-months ended June 30, 2021 2020 Foreign exchange gain$ 22,328 $ 5,957 Interest expense (1,459 ) (2,718 ) Other income 133,257 - Total other income, net$ 154,126 $ 3,239
Foreign Exchange Gain (Loss)
We incurred foreign exchange gains of
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
Other income was
Provision for Income Taxes
For the three and six-month periods ended
Net Loss for the Period
As a result of the foregoing, our net losses for the three and six-month periods
ended
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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
Approximately 28% of our consolidated revenue and 34% percent of our consolidated expenses are denominated in Canadian dollars; therefore, our consolidated cashflow may be impacted by foreign exchange fluctuations.
Off-Balance Sheet Arrangements
At
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