Southpaw Posted August 22, 2016 Author Share Posted August 22, 2016 Not sure...one dumb seller...only 500 shares traded at $0.47...with lots of volume in high .50s. bid is $0.55 now (16k) and ask is $0.60 (107k shares offered out loud). At $.56 it's still only about 7.5x our 2017 EBITDA estimate. They report Q2 tomorrow, FYI. Link to comment Share on other sites More sharing options...
Southpaw Posted August 25, 2016 Author Share Posted August 25, 2016 QIS reported and Core revenue accelerated to +29% Y/y, from +22% last quarter. Net new Revenue signals that they are still adding 11-12 new dealerships per quarter. EBITDA showed a decline y/y, mostly due to a ~$150k marketing cost from the NADA conference that fell into Q2 this year versus Q1 last year. Support staff has been scaled up quite a bit the last few quarters and should be ready for continued accelerating growth. Link to comment Share on other sites More sharing options...
ssuunnyy Posted August 25, 2016 Share Posted August 25, 2016 Thanks for the update. 1) Any sense of why new installs seem to dip in Q2 relative to Q1? (Looks like this has happened this year and each of the previous 4 years other than 2014). Is this a function of sales being 'pushed' to Q1 from Q4 of the previous year for some annual budget/tax purposes or am I seeing a false pattern in a tiny sample set? 2) Also, I've been estimating new install count by dividing New Implementation Revenue by $40,000. By that measure we've seen 19 new adds in the past two quarters (10.5 in Q1 and 8.5 in Q2) - what are you and I doing differently that you're arriving at 11-12 new dealerships per quarter? 3) Finally - do you have a sense of total rooftops (and how that compares to your projections)? The count on the dealership success scorecard on page 3 of their financials doesn't look like it refers to non-overlapping sets of dealerships that could just be added up... Link to comment Share on other sites More sharing options...
Southpaw Posted August 25, 2016 Author Share Posted August 25, 2016 Ssuunnyy-- 1) Probably just a false pattern in a small sample size (2014 was not this way), but entirely possible there are more holidays or something is getting pushed from December to January as you state. Can't be sure. 2) On the install count, I do think they have recently been slightly discounting the implementation for large dealer groups who commit to a high number of dealers so the revenue is likely less than $40k/install. My 11-12 statement was likely too aggressive...full year estimate at 36/year through 2019 in base case (+43 in 2017 bull case). 3) Planning to ask management about this. You can't just add up the Dealer success scorecard items. Generally they are surpassing our earlier expectations. If you look back, you will see we were modeling 30 dealer adds a year for the next few years...definitely on pace to beat this and slightly beat our current 36. Let me know if you uncover anything else. Link to comment Share on other sites More sharing options...
ssuunnyy Posted August 30, 2016 Share Posted August 30, 2016 How do you think about/guard against the risk posed by the long-term prospects of auto dealerships? With the rise of direct-to-consumer car companies (Tesla) and trends towards lower rates of car ownership, which seem likely to be only magnified and accelerated by rideshare services and autonomous vehicles, it seems reasonable to conclude that the long-term prospects of auto dealerships are not as solid as, say the prospects of QHR's medical customers. I appreciate your notes so far that all point to the notion that as long as a dealership is operating, its DMS spend won't really drop: ie DMS is a core service, dealers tend not to cancel memberships for individual users, and data from 2009. But it doesn't seem absurd to imagine a future where a significant portion of dealerships do in fact stop operating. Even if this secular decline were to briefly push struggling dealerships towards a cheaper DMS system like QIS, in the long term this seems like a net risk (and perhaps a high-probability one) that introduces an element of timing a secular shift in the market. In a static world QIS is clearly a solid bet, but I'm not sure how to reconcile this with selling to a target market that be due for a shakeout in the near future. Curious how you think about this. Do you view the probability of this change differently, the magnitude of this change differently, or have you simply settled on an approach to timing this trade that you expect will allow you to sidestep this potential shift? I appreciate your thoughts, as always. Link to comment Share on other sites More sharing options...
Southpaw Posted August 30, 2016 Author Share Posted August 30, 2016 It is a good question but seems too abstract for me and is a very long term worry. The market will generally not care about anything that is >3 years away. Tesla has been around for 14 years now and is a literal rounding error and I don't expect that to change much. I don't believe car ownership rates are declining rapidly overall in the US and Canada, but if you have a reliable source showing otherwise I'd be curious to see it. Even with Uber I feel most people still want to own their own car. It may be more important to look at miles driven, as dealers derive about 45-50% of gross profit from the service side and are less sensitive to new car sales. There are many ways to perfectly hedge this risk out, e.g. short CDK, short auto dealership stocks, short auto OEMs, short auto parts suppliers, etc. Another mitigating factor against this long term risk is that I believe once they stop trying to grow aggressively and shift purely into cash flow harvest mode, operating margins will easily exceed 40% and you will get the entire enterprise value back in cash in a hurry. As evidence, Reynolds & Reynolds is doing something like 50% operating margins with low growth. Also there could be plenty of strategic acquirers even if growth slowed. Alberta is going through a recession, Canada has gone through an energy depression, and meanwhile car sales are surging and QIS is growing core revenue at 29%. Focusing on the tangible micro playing out in real time over the long term hypothetical macro tells a truer story for this situation. Link to comment Share on other sites More sharing options...
Southpaw Posted October 12, 2016 Author Share Posted October 12, 2016 Quorum announced they have hired a third party IR consultant. The press release doesn't get pushed to US news wire services or financial websites, so sharing here. Sounds like they will soon have a corporate IR presentation available and will commence quarterly earnings conference calls. http://quorum.mwnewsroom.com/press-releases/quorum-information-technologies-appoints-daniela-trnka-as-investor-relations-con-tsx-venture-qis-201610041071455001 Link to comment Share on other sites More sharing options...
Southpaw Posted October 13, 2016 Author Share Posted October 13, 2016 Press release this morning: Quorum Information Technologies and Xtime Announce Partnership Marketwired October 13, 2016Comment CALGARY, ALBERTA--(Marketwired - Oct 13, 2016) - Quorum Information Technologies Inc. (TSX VENTURE:QIS) (Quorum) and Xtime, a Cox Automotive brand, announced today that they have successfully completed integration between their respective products. Xtime's online service appointment scheduling tools will communicate with Quorum's dealership and customer management system, XSELLERATOR, to allow customers to schedule service appointments online. Appointments scheduled via the dealership's website will automatically transfer into XSELLERATOR and convert to a repair order when the customer arrives. Several Quorum dealership clients participated in extensive testing and piloting of the new capability. Dan Ichelson, Quorum's Vice President of Operations & Development, and Jim Roche, Xtime's SVP of Marketing & Managed Services, jointly made this announcement after officially completing the integration project. "We both recognize the value this integration will bring to our mutual customers," Mr. Ichelson commented. "Xtime is a leader in online service scheduling and having an integrated process for appointments provides an excellent experience for customers." "The partnership between Quorum and Xtime is integral to the dealership's profitability by transforming the way they communicate with their customers and streamlining operations," said Mr. Roche. "The successful integration of the products will allow for a unique and robust scheduling experience, enabling a better user experience while helping the dealership to be more productive and efficient." Link to comment Share on other sites More sharing options...
Southpaw Posted November 21, 2016 Author Share Posted November 21, 2016 QIS reported last week. The stock is at 2.2x 2016 sales and 12.9x our 2016 EBITDA estimates. It's at 2.0x 2017 sales estimates and below 10x our EBITDA estimate. Revenue growth decelerated this quarter purely from low margin transition revenue decline, and EBITDA margins ticked higher. Core recurring revenue was up 19% y/y in the quarter and is up 23% YTD y/y. Net new revenue, the best leading indicator, was up 74% y/y in the quarter and is up 102% YTD y/y. Net new revenue accelerated sequentially and was just below the Q1 2016 record. This pretty much guarantees solid Support and Support Plus revenue growth next year. We think Support Plus revenue growth decelerated as management likely assigned more personnel to ensure smooth implementation at a few large dealers during the quarter. The positive of this is ARPU will rise. Support Plus revenue was up 32.2% in the quarter and is up 52% y/y (YTD through first three quarters). Cash flow has been a bit lighter than expected, as some one-time integration work with auto OEMs is still happening. On a side note, to again highlight the value discrepancy, LOCK just got a buyout offer this morning. It is growing slower than QIS, has worse EBITDA margins, and is a much worse business with high customer churn yet still received a valuation at 3.2x EV/LTM sales. Link to comment Share on other sites More sharing options...
Southpaw Posted December 12, 2016 Author Share Posted December 12, 2016 Hi guys, my colleague has been appointed to the board of Quorum so I will no longer provide any public updates on here. Happy to chat via more formal methods for those interested and would also suggest just reaching out to the CEO or CFO, or newly hired investor relations person directly (Daniela Trnka: dtrnka@nucleus.com). info@vosscap.com Thanks. -- http://quorum.mwnewsroom.com/press-releases/quorum-appoints-jon-hook-of-voss-capital-to-board-of-directors-tsx-venture-qis-201612121079861001 Quorum Appoints Jon Hook of Voss Capital to Board of Directors Dec 12, 2016 - 17:00 ET CALGARY, ALBERTA--(Marketwired - Dec. 12, 2016) - NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS. Quorum Information Technologies Inc. (TSX VENTURE:QIS) ("Quorum" or the "Corporation") is pleased to announce that, effective December 9, 2016, Jon Hook has been appointed a director of the Corporation. Mr. Hook has over seven years of equity investment experience, first working at the Teacher Retirement System of Texas (TRS) for five years covering Software & Services, and at Voss Capital LLC for the last two and a half years. Prior to TRS, he worked for over three years at EMR software provider Epic Systems. Mr. Hook obtained his MBA from Rice University and holds the Chartered Financial Analyst (CFA) designation. "This is an exciting time in Quorum's history and I am delighted to join the board. The ongoing adoption of Quorum's DMS by auto dealerships and the strong execution by the management team has been impressive. I am optimistic about the promising strategic opportunities for Quorum and look forward to working with the board to help the company realize its full potential and maximize shareholder value." About Quorum Quorum is a North American company focused on developing, marketing, implementing and supporting its XSellerator product for GM, Ford, Chrysler, Toyota, Hyundai, Kia, Nissan, Subaru, NAPA and Bumper to Bumper franchised dealership customers as well as other franchised, independent and some non-automotive dealerships. XSellerator is a dealership and customer management software product that automates, integrates and streamlines every process across departments in a dealership. One of the select North American suppliers under General Motors' DTAP program, Quorum is also one of largest DMS providers for GM's Canadian dealerships with 25% of the market. Quorum is a Microsoft Partner in both Canada and the United States. Quorum Information Technologies Inc. is traded on the Toronto Venture Exchange (TSX-V) under the symbol QIS and in 2016 was selected to the TSX Venture 50®, an annual ranking of the strongest performing companies on the TSX Venture Exchange. For additional information please go to www.QuorumDMS.com. Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed this release and neither accepts responsibility for the adequacy or accuracy of this release. Quorum Information Technologies Inc. Maury Marks President & Chief Executive Officer (403) 777-0636 MarksM@QuorumDMS.com Link to comment Share on other sites More sharing options...
jimjam Posted December 12, 2016 Share Posted December 12, 2016 Southpaw, just wanted to say thanks for all your useful posts about QIS and HGN. I've invested in both. Communication with QIS's investor relations was previously a mess (they never replied, they failed to send news releases out to their mailing list, etc...): I'll contact Daniela to see if she can sort it out. Link to comment Share on other sites More sharing options...
KJP Posted January 28, 2017 Share Posted January 28, 2017 More encouraging news: Nissan integration complete and first Nissan dealerships up and running: http://quorum.mwnewsroom.com/press-releases/quorum-announces-dms-certification-with-nissan-tsx-venture-qis-201701271084132001 Communicator usage continues to grow: http://quorum.mwnewsroom.com/press-releases/quorum-s-communicator-messaging-tool-achieves-record-usage-among-dealers-as-quor-tsx-venture-qis-201701251083750001 Integration with Autovance: http://quorum.mwnewsroom.com/press-releases/quorum-and-autovance-announce-partnership-tsx-venture-qis-201701261083754001 Southpaw has very helpfully gone through the numbers on this earlier in the thread. By year-end 2017, it looks like EV/Recurring Revenue at current market cap could be around 2.0x, and the company is cash flow breakeven (and overcapitalized) despite solid growth. It's very hard to find a similar company at those kind of multiples. Link to comment Share on other sites More sharing options...
KJP Posted January 28, 2017 Share Posted January 28, 2017 I just saw this in Greenhaven's annual letter: Finally, in the last letter, I stated that we are acquiring as many shares as we can of a small Canadian company with 97% customer retention, a large competitor leaving the industry, and a large customer just acquiring 10% of the company. We are still buying. https://static1.squarespace.com/static/5498841ce4b0311b8ddc012b/t/588bb3d39f74561d0b69fbb7/1485550548279/Q4+2016+FINAL_.pdf That company description sounds quite familiar. Link to comment Share on other sites More sharing options...
sae85400 Posted February 23, 2017 Share Posted February 23, 2017 Does Canada have a 13D equivalent? And where do you find that? Link to comment Share on other sites More sharing options...
Guest notorious546 Posted February 23, 2017 Share Posted February 23, 2017 Ya that does sounds right KJP. It seems like shares are reasonably cheap i see 40.8 million market cap and maybe around 7 million ebitda run rate into year end 2017. Link to comment Share on other sites More sharing options...
ssuunnyy Posted June 14, 2017 Share Posted June 14, 2017 What are you all's theories around the drop from .94 to .68 over the last 4 months? Is this an issue of decelerating growth? Link to comment Share on other sites More sharing options...
KJP Posted February 2, 2018 Share Posted February 2, 2018 It has been a disappointing year for Quorum because of increased churn and lower new adds. The facts underlying the pending antitrust suits against CDK Global and Reynolds may be one of the causes: http://www.autonews.com/article/20171218/RETAIL07/171219773/cox-lawsuit-sues-cdk-reynolds Link to comment Share on other sites More sharing options...
wisowis Posted May 18, 2018 Share Posted May 18, 2018 Q1 2018: http://quorum.mwnewsroom.com/getattachment/ca648a15-899b-4755-9b35-0a6ea5fbc4df/ SaaS support revenue up 12% to a run rate of $11,386,920. Based on today's close, it is trading at ~2.3x recurring revenue. They've added 20 new employees and added Ford USA OEM integration. Should be prepared for future growth in the US. Link to comment Share on other sites More sharing options...
wisowis Posted August 30, 2018 Share Posted August 30, 2018 Q2 2018: http://quorum.mwnewsroom.com/getattachment/4889ad3a-ac25-494f-a134-cd0c4fd65d03/ SaaS support revenue up 11% Q2 2018 vs Q2 2017. Only 3 rooftop installs in Q2, but 9 planned for Q3, and 8 others sold for future quarters. Total of 352 active rooftops now. Still trading at less than 3x recurring revenue. Link to comment Share on other sites More sharing options...
KJP Posted August 30, 2018 Share Posted August 30, 2018 The new presentation they posted and the Q2 MD&A are worth reading. The MD&A continues much more detail about the financials, including gross margin by revenue type, which they didn't previously disclose. For example, you can now see how much of the installation costs they are eating and how much of the SaaS revenue they report actually represents sales of third-party products. Overall, it seems like a concerted effort to reach out to investors and be more transparent. Link to comment Share on other sites More sharing options...
Southpaw Posted December 4, 2018 Author Share Posted December 4, 2018 Noticed no one had posted in a while. Anyone still following? Quorum announced a transformative, accretive acquisition that doubled the size of the company. Also, Beacon Securities initiated sell side coverage last week with a $1.25 price target (3x 2020 revenue, still several multiple turns below comps). From the press release for the Dealermine acquisition: There are many strategic reasons for the transaction, including: - Accelerating Quorum’s strategy to be a full-service provider to automotive dealerships by adding DealerMine’s complementary product set and BDC services. - DealerMine is a fast growing business with a proven management team and a large number of very successful dealership customers. - DealerMine’s Service CRM products and BDC services have a strong growth opportunity within the existing Quorum customer base. - The Transaction significantly expands the new combined Company’s scale and footprint in the automotive dealership software space. - Quorum expects some economies of scale in the areas of industry events/memberships, government financing/programs and OEM relationships/programs across the combined entity. - Quorum expects the Software as a Service (“SaaS”) revenue, BDC revenue, EBITDA and cash flow from the Transaction to be immediately accretive. Like with the Autovance acquisition, there should be some good cross-selling opportunities. Full press release: http://quorum.mwnewsroom.com/press-releases/quorum-announces-acquisition-of-dealermine-inc-tsx-venture-qis-gnw_2577167_001 Link to comment Share on other sites More sharing options...
KJP Posted January 4, 2019 Share Posted January 4, 2019 Another acquisition: http://globenewswire.com/news-release/2019/01/02/1679859/0/en/Quorum-Announces-Acquisition-of-Oasis-Auto-Complete-Systems-Limited.html Much smaller than DealerMine. This one appears to be intended to open up the independent (as opposed to franchised) dealer market. Link to comment Share on other sites More sharing options...
wisowis Posted September 7, 2019 Share Posted September 7, 2019 Figured I would bump this since they now have ~6 months of operations under their belt with their new acquisitions. SaaS revenue is up 98% yoy, but stock price is up 50%, so it is now sitting at 2.5x SaaS revenue (based on $22.3 million SaaS revenue run rate). They now have >1000 unique customers. You can check out the highlights here: http://1ptzxx15cz712470mu46qduu-wpengine.netdna-ssl.com/wp-content/uploads/securepdfs/2019/08/Q2-2019-FACT-SHEET-FINAL-1.pdf Link to comment Share on other sites More sharing options...
wisowis Posted October 27, 2019 Share Posted October 27, 2019 Looks like they are raising money through a bought deal. Quorum Announces Upsized Bought Deal Financing to $8 Million CALGARY, Oct. 18, 2019 /CNW/ - Quorum Information Technologies Inc. (TSX Venture: QIS) ("Quorum" or the "Company"), a leading provider of dealership and customer management software and value-added services to the automotive industry, is pleased to announce that in connection with its previously announced bought deal financing, the Company and a syndicate of underwriters led by Cormark Securities Inc. (collectively the "Underwriters") have agreed to increase the size of the previously announced financing. The Company will now issue 9,195,500 common shares (the "Shares") of the Company at a price of $0.87 per Share (the "Issue Price"), representing gross proceeds to the Company of approximately $8.0 million (the "Offering"). The Company and the Underwriters have also agreed to increase the Underwriters' option (the "Option") to sell up to an additional 15% of the Offering at the Offering Price if the Option is exercised in its entirety, for aggregate gross proceeds of approximately $9.2 million. I am not sure diluting shareholders by ~15% is the right move at this valuation, seems like expensive capital to raise. Curious to hear from management what they'll spend that capital on. Link to comment Share on other sites More sharing options...
wisowis Posted February 9, 2020 Share Posted February 9, 2020 Share price has increased a lot, could be partially due to Donville Kent including them in his "Stocks for the next decade" (attached). I see it as an intrinsic negative to be co-invested with weak shareholders like them.DKAM_ROE_Reporter_January_2020_.pdf Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now