Ladies and gentlemen, thank you for standing by. My name is Shirelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Quorum Information Technologies, Inc., Q3 2023 Result Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Maury Marks, President and CEO. Please go ahead. Thank you, Shirelle. Hello, everybody, and thank you for attending Quorum Information Technologies Q3 2023 Results Conference Call and concurrent webcast today. Joining me on the call today is our Chief Financial Officer, Marilyn Bown. Quorum is a North American software and services company providing essential enterprise solutions that automotive dealerships and original equipment manufacturers rely on for their operations. Through a combination of purposeful product investments and five strategic acquisitions in the last six years, including our latest acquisition of VINN on June 23rd, Quorum now has a uniquely integrated product suite of 13 essential software solutions that are used in whole or in part by 1,428 dealership customers across North America. Now, with 13 of the 25 most common categories of software that dealerships utilize, Quorum is well positioned to develop, partner, or acquire products for the remaining 12 categories. Dealerships typically start with a single product from Quorum's product suite and experience increased synergy and value as additional Quorum solutions are deployed to their dealerships. Many of Quorum's customers only leverage one solution out of the 13 available Quorum solution. The result is that Quorum has a CAD 55 million annual SaaS revenue cross-selling opportunity across our existing customer base. That growth opportunity is approximately two times our CAD 28.3 million SaaS annual recurring revenue run rate, and that is just within our current customer base. Today, at least one of Quorum's software solutions is installed in 40% of the franchise automotive dealerships in Canada. In the past six years, Quorum has added 1,055 of the 1,428 unique rooftops we have today, primarily through acquisition, combined with some organic growth. Moving on to our results for Q3 2023, Quorum posted total revenue of CAD 10.4 million, a 6% increase over the same quarter last year. In Q3 2023, we also delivered a record 19% Adjusted EBITDA margin, up 2% from the 17% we achieved in the same quarter last year. As we continue to face a challenging economic environment that has slowed our revenue growth since Q2 2022, we have focused our attention on Adjusted EBITDA margins. Our Q3 2023 record Adjusted EBITDA margin improves the company's financial security and provides us the flexibility to start paying down some of our BDC Capital debt. In fact, post Q3, on October 27, 2023, we made a prepayment of CAD 1.6 million in principal and interest on our BDC Capital loan facility. We also continue to have access to CAD 4 million in additional funding through the BDC Capital facility for potential future acquisitions. Marilyn will now review our financial results in more detail, and I will follow with some additional comments. After our prepared remarks, we'll open the floor to your questions. Marilyn, please go ahead. Thank you, Maury, and hello, everybody. Thank you for being here with us today. I would like to remind everyone that certain statements in this presentation and on our call are forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors outside of management's control that could cause actual results to differ materially from those expressed in the forward-looking statements. Quorum is not assuming responsibility for the accuracy and completeness of the forward-looking statements and does not undertake any obligations to publicly revise these forward-looking statements to reflect subsequent events or circumstances. For additional information on possible risks, please refer to our annual MD&A, dated December 31, 2022, on the sedarplus.ca website. As Maury mentioned, we continued a disciplined approach to profitability in Q3 2023, delivering year-over-year increase of 15% for Adjusted EBITDA and 13% for Adjusted Cash Income, or ACI. Additional highlights of our third quarter 2023 results are as follows: Total revenue increased by 6% to CAD 10.4 million, compared to CAD 9.9 million in Q3 2022, and increased by 4% to... compared to CAD 10 million in Q2 2023. SaaS revenue increased by 1% to CAD 7.1 million in Q3 2023, compared to CAD 7 million in Q3 2022. BDC revenue increased by 6% to CAD 2.8 million in Q3 2023, compared to CAD 2.6 million in Q3 2022. Gross margin came in at 47%, compared to 49% in Q3 2022, mainly due to an increase in services and one-time revenue, which is lower gross margin revenue. SaaS gross margin decreased slightly to 67% in Q3 2023, as compared to 68% in Q3 2022. BDC gross margin increased to 20% in Q3 2023, as compared to 14% in Q3 2022, and as compared to 12% in Q2 2022. 2023 as Quorum continues to work on multiple initiatives to reduce the BDC cost structure. Adjusted EBITDA margin increased by 2% to 19% in Q3 2023, compared to 17% in Q3 2022. Adjusted EBITDA increased by 15% to CAD 2 million in Q3 2023, compared to CAD 1.7 million for Q3 2022. The increase in Adjusted EBITDA is primarily attributable to an increase in gross margin and decreases in sales and marketing and general and administrative expenses, offset by an increase in research and development expenses. Adjusted cash income for Q3 2023 increased by CAD 0.1 million as compared to Q3 2022, primarily due to the increase in Adjusted EBITDA. Including cash of CAD 5.2 million, total net working capital as of September 30, 2023, decreased by CAD 0.6 million as compared to December 31, 2022. This decrease is primarily due to an increase in contingent consideration related to the VINN acquisition, decreases in prepaid expenses and loan receivable, offset by an increase in accounts receivable. As Maury mentioned earlier, on October 27, 2023, Quorum made a prepayment of CAD 1.6 million in principal and interest on its BDC Capital loan facility, which consisted of a CAD 0.6 million prepayment on the mezzanine loan and a CAD 1 million prepayment on the cash flow loan. As a result of this prepayment, Quorum reduced its principal amount under the BDC Capital facility by CAD 1.5 million, from CAD 10.7 million to CAD 9.2 million, resulting in CAD 0.2 million in annual interest expense savings. With that, I'd like to pass it back to Maury. Thank you, Marilyn. One of the statements that I made in the Q3 press release was that our more efficient sales strategy that prioritizes cross-selling continues to drive growth and cost savings. Let me provide more background on that statement. Starting late in 2022, we transitioned our sales strategy to improve our cross-selling to better capitalize on the CAD 55 million annual SaaS cross-selling opportunity that I mentioned in my opening comments. The initial focus was to increase our cross-selling by harmonizing our sales strategy between our sales and our account management teams. After having completed the key elements of our harmonizing initiative, we are now working on transforming our business to a dealer performance company. This requires ensuring all our products produce a positive ROI for our dealership customers, and also requires increasing our dealerships' utilization of these products to help drive their results. Another statement from our Q3 press release yesterday was, "Our more efficient sales strategy, combined with our BDC gross margin expansion and a continued focus on company-wide cost savings, produced record Adjusted EBITDA and ACI margins for the quarter." Let me provide more background on two key elements of that statement. One, in the quarter, our BDC achieved a 20% gross margin. This achievement was primarily due to new leadership, multiple projects to improve our BDC agents' efficiency, and a focus on better accountability and performance across our agents. Going forward, we are working on generative AI project to further improve our efficiency in the BDC. Two, we have had a long-term focus on company-wide cost savings. Recently, we went through a zero-based budgeting exercise to optimize our costs in all areas of the company. Most recently, to find additional cost savings, we compared our company to some of the best-of-class gross margin cost ratios from other technology companies across North America. The result from the above is that we produced record Adjusted EBITDA and ACI margins in Q3. Next, I wanna provide an update on our VINN acquisition that was made late in Q2. As a reminder, VINN provides a premier automotive marketplace that streamlines the vehicle research and purchase process for vehicle shoppers while helping retailers sell more efficiently. We are currently working on combining the VINN automotive marketplace with our MyDeal digital retailing solution to have an offering for both our dealer groups and individual dealerships. In conclusion, I wanna sincerely thank our dedicated employees and customers, who are the driving force behind our continued growth and drive to innovate, to ensure Quorum continues to have a product suite prepared for the future of automotive. Operator, I'd now like to open the conference to any questions from our audience. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Gavin Fairweather with Cormark Securities. Gavin, your line is open. Hi, Maury. This is Graham on for Gavin. I just have- Yep ... a few quick questions. So just on the impressive services gross margin, it's come up quite a bit faster than we expected. I was just kind of trying to understand, you know, like, how high you guys think that you can sort of take that once you've sort of introduced this generative AI? Is it reasonable to say that you could bring it into the mid-20s, or is it sort of in the near term, while you develop that, is that gonna stay in the kind of that 20% range? Graham, and just to be clear, your question is about the BDC revenue, right? Yeah, sorry, the BDC. Yeah. Yeah. Yeah. Yeah, so, so, I mean, obviously, we're gonna continue to work on different initiatives to improve BDC revenue. Yeah. And BDC margins. And we're pretty excited about the big jump in BDC margins, but it comes after a lot of hard work and a number of sort of frustrating quarters, where we moved the needle a little bit at a time, but not—but we never really made substantive progress on it. So, you know, we think we're now in a place where we can continue to make improvements in BDC gross margins. I'm not gonna give you a target of where we think we can get to, but we're pretty excited that, you know, we can continue to work to move the needle on BDC gross margins. For sure. That, that's really helpful. And then you also mentioned that you sort of took out some of the costs and in S&M and GNA that kinda increased R&D. Where are those sort of incremental R&D dollars going towards? Like, what actual specific projects or initiatives? Any color on that would be helpful. Yeah, so there's a number of initiatives. So let me go across our product suite and call out maybe some key ones for you. On our DMS side of things, we delivered a new ribbon menu and a new omni search, and we've got a couple other little things planned for our DMS customers. On our DealerMine CRM products, we delivered a new mobile app, and we are in the process of looking at building out a dashboard for our sales CRM portion of that product. On the service CRM side, we've got... We're changing, we're pursuing a digital-first strategy under our service CRM product that just allows a dealership to really customize how they reach out to their different customers and do it in multiple ways, so it gives them more flexibility around doing that. We've got, of course, the AI, generative AI project that I mentioned on the BDC side. Autovance and VINN, we're doing work to integrate those two products for the marketplace. Those are a few off the top of my head. So we have a lot going on the R&D side of things. A lot of innovative, creative stuff that really should help our customers out. Okay, I appreciate that. That's helpful. And then just one on the sort of ARPU and rooftop dynamic. We kinda saw a little line when there was a bit of turn in Accessible Accessories and then one of the other products, and now we're kinda seeing that flatten out, but then there's a bit of a dip in ARPU. I was just kind of wondering, is that you sort of adding on locations that are at a lower ARPU, and how do you kinda see that progressing going forward? Yeah, yeah, it is. So it's a result of adding on locations at a slightly lower ARPU. You know, we're always working to try, obviously, to increase our rooftop count, and our MARPU at the same time. So, you know, looking forward, you know, that's our focus across the organization. Sorry, I'm just flipping to the chart as you're asking the question. Yeah. Yeah. Of course. I mean, MARPU, MARPU declined by CAD 4 within the quarter, so it wasn't from 1,655 to 1,651, just so all our listeners are aware of the difference. So it was quite an immaterial difference, but it's not the direction we'd like to see it going. We'd like to see MARPU increasing quarter-over-quarter. Absolutely. Perfect. Thank you. And then just one more from me. Maybe if you could just talk about the general macro backdrop on your different business lines, that'd be great. What are you kinda seeing in the next couple quarters, thanks? So you're talking about the automotive dealerships background or macro environment and what we're seeing? Yeah. So if I think about across the dealership, I mean, obviously they have a sales department and a service and parts department. Service and parts together, we typically refer to as a fixed operations department. You know, when it comes to sales and sales of vehicles, in the past, historically, vehicle inventory has been a real problem for dealerships, and I think as we all know, the price of vehicles went up pretty significantly, and it was really hard to find a vehicle. We're seeing more and more inventory showing up at dealership lots, and that varies based on manufacturer. So some manufacturers are really doing a good job of getting inventory on the lots of dealerships out there. You know, unfortunately, the timing is quite difficult because now dealerships are having to really sell cars again. And they've got, they've got the inventory, and so they've got to find buyers for those particular cars, but we're in an inflationary environment with high interest rates, with prices of cars being at an all-time high. So, you know, I think there's some, some caution across our dealerships and the sales departments out there. And, you know, I think there's still... I go to a line that I heard from one of our dealer principals across that runs a large dealer group, and he said, "You know, right now we're selling cars to people who need cars."... not people who want cars. And so when we run out of customers that need cars, and we're just to the ones that want them, it's gonna be a difficult environment to sell in, too, given the high price of cars and the high interest rates. So there's just some caution on the sales side. And then for us, you know, for Quorum, what that translates into is it's a more difficult environment to sell our sales CRM solutions, our digital retailing solution, VIN into. However, if we are helping the dealership drive more leads into their sales department, and those are good, solid, qualified leads, well, then those solutions can be very helpful to a store. So then switching over to the fixed operations side, so the service and parts side of the business, you know, that continues to be a real stabilizing force within the dealerships. That business continues to perform for most of our dealership customers out there. In the—in recessionary times, that's an area of the business that dealerships can count on to sort of continue to generate positive revenue, positive revenue growth, positive net income for them. And it's sort of that stabilizing, recurring portion of a dealership's business. So anything we can do across our service CRM products, our BDC services, our PowerLane product, which is a digital solution for their service lane, across those products that help the dealership with throughput in their service and parts department, with increasing the amount of revenue per customer, are all products that are quite welcome to dealerships. But you know, dealerships are, to my overlying comment about the macroeconomics, they're just. They're cautious. It's a cautious time for most people running any business out there. So hopefully that helps. Yeah, that's very helpful. Thank you, Maury. I'll pass the line. Your next question comes from the line of Mitchell McQuiggin from Leede Jones Gable. Mitchell, your line is open. Hey, Maury. I just had a few questions on the integration of the VIN acquisition. I'm just wondering how that's coming along, and if any new dealers have been brought on? Yeah. So we are, we're working through it, Mitchell. It's gonna take us a little bit more work than we originally sort of scoped it out to be. So it's gonna. We're We're gonna be into the new year before we're ready to start rolling that out to dealerships. So as a consequence, we haven't brought any new dealerships on. We wanted to finish that integration first. We have some interesting perspectives on it. So not only are we integrating the MyDeal digital retailing product into the VINN solution, but we also want to be able to take the VINN solution for dealer groups and have a separate instance of it, that we can sell the dealer group, so that that could be their primary group website that their customers could go to and search across that website and to find vehicles across all their different dealership rooftops. So we're sort of expanding how we're looking at it, but we're pretty excited about getting that done and getting it rolled out to market. Okay, awesome. That's everything. Thank you. You bet. Thanks for the question. Thanks for all the questions from everybody. Anything else? The next question comes from the line of William Koenig with Leede Jones Gable. William, your line is open. Hi, Maury. Quick question on your US growth from Rooftops. Is that related to AutoCanada, or is this a whole new dealership that you're getting, or new dealerships that you're getting? Yeah. So it's not AutoCanada. It is related to new dealerships, and there's a mix of DealerMine and DMS in there. Perfect. Thanks. You bet. At this time, there are no further questions. I would now like to turn the call back over to Maury Marks, President and CEO. All right. Well, thanks, everybody, for your continued support of Quorum and your continued interest in Quorum. And, yeah, we look forward to talking to you again when we release our annual results. With that, we'll conclude today's call. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.