Slides
Page 1
Investor Presentation Q1 2025 Quarterly Results May 28, 2025
Page 2
2 Forward Looking Information Disclaimer This report contains certain forward-looking information and statements within the meaning of applicable securities laws. All statements in this report, other than statements of historical fact, which address events or developments concerning Quorum Information Technologies Inc. ("Quorum" or the “Corporation”) that Quorum expects to occur are "forward-looking information and statements". The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "potential", "could", "scheduled", "believe", "plans", "intends", "might" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this document may contain forward-looking information and statements pertaining to the following: business plan of Quorum including its plans for targeting new Original Equipment Manufacturer (“OEM”) integration, new dealership rooftop sales, and increasing Automotive Group Partnerships; the timing for completion and cost of OEM integration; cross-selling initiatives across Quorum’s customer base; and estimates of return on assets and Adjusted EBITDA*; improvements in gross margins, operating margins, and Cash EBITDA*; potential merger and acquisition (“M&A”) opportunities; the timing of adoption of new accounting standards and the potential impact of new accounting standards on the Corporation’s financial statements; the effect of acquisitions on the Corporation including the effect of the VINN acquisition; the effect of the BDC Capital facility; the effect of the conflicts in Ukraine, Israel and Gaza on industry activity and economic activity in North America as a whole; various industry activity forecasts; potential impacts of proposed United States and Canadian tariffs; growth opportunities, including those in the United States; anticipated requirements by OEM manufacturers relating to integrations and certifications; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking statements throughout this report. The forward-looking information and statements contained in this report reflect several material factors, expectations and assumptions including, without limitation: (i) capital expenditures by dealers; (ii) market availability of current and future dealership rooftops; (iii) market availability of new and used vehicles and vehicle replacement parts; (iv) consumer vehicle trade-in and vehicle purchasing drivers and behaviour; (v) schedules and timing of certain projects and Quorum's strategy for growth; (vi) Quorum's future operating and financial results; and (vii) treatment under governmental regulatory regimes and tax and other laws. The forward-looking information and statements included in this report are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking information and statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation: (i) volatility in exchange rates for the Canadian dollar relative to the US dollar; (ii) liabilities and risks inherent in the software services industry; (iii) competition for, among other things, capital and skilled personnel; (iv) changes in general economic, market and business conditions in Canada and the United States; and (v) actions by governmental or regulatory authorities including changes in tariffs and income tax or other tax laws. Quorum cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this document speak only as of the date of this document, and Quorum assumes no obligation to update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws. Any financial outlook or future-oriented financial information in this document, as defined by applicable securities legislation, has been approved by management of Quorum. Such financial outlook or future-oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. UNITED STATES This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any such offer to sell or solicitation of an offer to buy the securities described herein or during the presentation will be made only pursuant to subscription documentation between Quorum and prospective purchasers. Any such offering will be made in the United States in reliance upon an exemption from registration under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), for an offer and sale of securities that does not involve a public offering, and the offer and sale of the securities will be conditioned on the receipt of representations, warranties and agreements of prospective purchasers to establish that exemption. Any securities described in this document have not been, and will not be, registered under the U.S. Securities Act and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the U.S. Securities Act and applicable U.S. state securities laws. Accordingly, the securities may not be resold, pledged, hypothecated or otherwise disposed of or transferred except in accordance with the registration requirements of the U.S. Securities Act and any applicable state securities laws or pursuant to an applicable exemption from such registration requirements of the U.S. Securities Act and any applicable state securities laws. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMMUNICATION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. * Please refer to the “Non-GAAP Measures” and “Glossary of Terms and Acronyms” slides in the Appendix of this presentation for the meaning of this term or acronym.
Page 3
About Quorum Quorum is a North American SaaS software and service company providing essential enterprise solutions that Automotive Dealerships and Original Equipment Manufacturers (OEMs)rely on for their operations. A combination of purposeful product investment and five strategic acquisitions in the last seven years has given Quorum a uniquely integrated product suite of 13 essential software solutions used in whole or in part by over 1,400 dealership customers. At least one of Quorum’s software solutions is installed in 40% and 0.6% of the franchised automotive dealerships in Canada and the USA, respectively. 3 * Please refer to the “Non-GAAP Measures” and “Glossary of Terms and Acronyms” slides in the Appendix of this presentation for the meaning of this term or acronym. STRATEGIC FOCUS • Quorum is focusing on a more profitable growth strategy which emphasizes cross- selling and better company-wide cost management. • This has resulted in Cash EBITDA* that has provided Quorum the ability to pay down $5.1 million of the $9.1 million BDC Capital Inc. Loan Facility in 2024, with an additional $0.3 million in Q1 2025 and $0.5 million in May 2025. • Quorum’s improved balance sheet provides Quorum the ability to invest in growth opportunities in the future. Q1 2025 Quarterly Results: Adjusted EBITDA* $1.5 million Adjusted EBITDA* Margin:15% Cash EBITDA* $1.0 million Cash EBITDA* Margin :10% Customer Dealerships(Rooftops) Over 1,400 in Canada and US Total Revenue $10.2 million SaaS* Revenue $7.2 million BDC* Revenue $2.6 million
Page 4
4 $1,500,000 $11,500,000 $21,500,000 $31,500,000 $41,500,000 $51,500,000 $61,500,000 $71,500,000 $81,500,000 $91,500,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 Q1 2025 Acquisition Timeline with Expanded Cross-Selling Opportunity • Five strategic acquisitions in the last seven yearshas given Quorum a uniquely integrated product suite of 13 essential solutions. • Quorum has acquired over 1,000 of its current over 1,400 dealership customers through acquisition and consequently, manycustomers only leverage 1 out of 13 Quorum solutions. • Quorum estimates it has a $54 million cross-selling SaaS revenue opportunity across its dealership customer base. • Quorum plans to capture this additional SaaS revenue opportunity through its “land and expand” product sales strategy Autovance Acquisition Q3 2017 DealerMine Acquisition Q4 2018 Oasis Acquisition Q1 2019 Accessible Accessories Acquisition Q2 2022 VINN Automotive Acquisition Q2 2023 $28.9 million Annual Recurring SaaS Revenue at Q1 2025 $54 million cross-selling opportunity to increase existing customer spendCross-Selling Opportunity Actual SaaS Revenue Growth
Page 5
5 Quorum Solutions Help Dealerships in the Competitive Automotive Market 2. NEED for FRICTIONLESS WORKFLOWS Better workflows from Sales and Service into the DMS which Quorum delivers through our complete product suite and dealership wide reporting tool. Dealership wide reporting tool for the full Quorum product suite 1. TRANSFORMING VEHICLE PRODUCT MIX Support ACES - Autonomous driving, Connectivity, Electrification, and Shared mobility trends. 4. SUPPORT EVOLVING CONSUMER DEMAND Consumers demanding new way of doing business without sacrificing gross margin - Quorum delivers digital retailing and touchless service experience. Quorum’s service lane inspection and quoting tools provides a touchless consumer experience and drives in $60K of customer pay revenue per dealership per month 3. IMPROVE DEALERSHIP PROFITABILITY Demand higher ROI from all our solutions which Quorum delivers through our Dealer Performance strategy. Quorum’s Business Development Centre services – a call centre for dealerships to contact customers for service and repair work Customer Relationship Management Tools that provide a 360-degree view of how dealership’s customers shop, service and interact with their store Quorum's MyDeal, digital retailing solution, and Desk, in store solution, integrate seamlessly ensuring online vehicle payments always match dealership sales staff numbers. Accessible Accessories add an accessories digital retailing solution and VINN adds a premier automotive marketplace to our offering. Dealership Management System
Page 6
6 Q1 2025 Key Highlights Q1 2025 Key Highlights (compared to Q1 2024) ▪ Revenue increased by 1% to $10.2 million compared to $10.1 million. ▪ SaaS Revenue increased by 1% to $7.2 million compared to $7.2 million. ▪ BDC Revenue increased by 4% to $2.6 million compared to $2.5 million. ▪ Annual Recurring Revenue (SaaS + BDC) was $39.4 million based on the first quarter of 2025 compared to $38.8 million based on the first quarter of 2024. ▪ Gross Margin decreased to $4.8 million or 48% of revenue compared to $5.1 million or 51% of revenue as SaaS gross margin decreased to 66% compared to 68% primarily due to an increase in third-party costs, and BDC gross margin decreased to 15% compared to 20% primarily due to staffing costs required to meet new customer revenue demand. ▪ Adjusted EBITDA* of $1.5 million compared to $2.1 million and an Adjusted EBITDA margin contraction to 15% from 21% due to the decrease in gross margin, expensing more software development costs, and increases in research and development expenses, and general and administrative expenses. ▪ In response to compressing margins,Quorum has already implemented $1.3 million in annual savings that will be fully realized in Q3 2025 including: a BDC gross margin improvement plan, office lease cost savings, third-party service provider savings and other cost improvements. ▪ Cash EBITDA* of $1.0 million compared to $1.4 million, and a Cash EBITDA margin contraction to 10% from 14% due to the decrease in Adjusted EBITDA. ▪ Total Debt - in Q1 2025 the Corporation made payments of $0.3 million on its BDC Capital loan facility, compared to $0.9 million in Q1 2024. * Please refer to the “Non-GAAP Measures” and “Glossary of Terms and Acronyms” slides in the Appendix of this presentation for the meaning of this term or acronym. (CAD $000's) Q1 2025 Q1 2024 Change Revenue SaaS revenue 7,232 7,196 1% BDC revenue 2,611 2,514 4% Services and one-time revenue 312 353 -12% Total Revenue 10,155 10,063 1% Gross margin 4,825 5,085 -5% Gross margin % 48% 51% Profitability Adjusted EBITDA* 1,523 2,142 -29% Adjusted EBITDA* margin 15% 21% Cash EBITDA* 1,021 1,396 -27% Cash EBITDA* margin 10% 14% Liquidity and Financial Resources Net working capital 3,705 4,060 -9% Cash and cash equivalents 3,747 3,996 -6% Total debt 4,968 9,642 -48% Total debt/LTM Cash EBITDA 1.0x 2.5x
Page 7
10.7 9.1 4.0 3.7 1.6 1.4 1.3 1.3 643% 366% 97% 98% 2022 2023 2024 Q1 2025 Long Term Debt - Unsecured (ACAO) Long Term Debt - Secured (BDC Capital Inc. Loan Facility) TOTAL Debt*/LTM Cash EBITDA* A More Profitable Growth Strategy with a Decrease in Long-T erm Debt Quorum’s improved profitability provides the latitude to accelerate the pay down of the BDC Capital Inc. Loan Facility, which has been reduced in Q1 2025 by $0.3 million, to $3.7 million. Our improved profitability also positions us to consider other future capital investment opportunities. Long Term Debt (at March 31, 2025): ▪ Government Loans (unsecured) • ACOA Loans of $1.3 million at 0% interest ▪ BDC Capital Inc. Loan Facility (secured) • Mezzanine Loan of $2.8 million at 10.55% interest • Cash Flow Loan of $0.9 million at 7.55% interest Quorum paid $0.3 million in Q1 2025 against the BDC Capital Inc. Loan Facility (including $0.1 million of required principal payments), and subsequent to the quarter, $0.5 million in Q2 2025 (May 8th, 2025). Quorum plans to pay down the BDC Capital Inc. Cash Flow Loan of $0.9 million as of March 31, 2025, to $nil by the end of 2025. Quorum will continue to prepay 15% of the BDC Capital Inc. Mezzanine Loan balance on an annual basis until maturity in August 2027. Paying more than 15% on an annual basis would result in significant penalties. 7 * Please refer to the “Non-GAAP Measures” and “Glossary of Terms and Acronyms” slides in the Appendix of this presentation for the meaning of this term or acronym. Long -Term Debt In millions $CAD
Page 8
8 Historical Financial Performance (in $CAD millions) Revenue Profitability** SaaS* Gross Margin BDC* Gross Margin * Please refer to the “Non-GAAP Measures” and “Glossary of Terms and Acronyms” slides in the Appendix of this presentation for the meaning of this term or acronym **Cash EBITDA has not been calculated for 2017 – 2021. $10.3 $12.7 $22.3 $22.1 $25.7 $27.6 $28.2 $28.8 $7.2 $0.8 $6.8 $7.5 $9.4 $10.4 $10.9 $10.0 $2.6 $2.5 $2.9 $3.7 $1.2 $0.9 $0.7 $1.2 $1.1 $0.3 - 32% 183% 188% 242% 270% 280% 277% 2017 2018 2019 2020 2021 2022 2023 2024 Q1 2025 Services & One-Time Revenue BDC Revenue (Recurring) SaaS Revenue (Recurring) Recurring Revenue Growth since 2017 $7.0 $8.7 $14.7 $14.0 $16.8 $18.7 $18.9 $19.4 $4.7 68% 68% 66% 63% 65% 68% 67% 67% 66% 2017 2018 2019 2020 2021 2022 2023 2024 Q1 2025 SaaS Revenue Gross Margin SaaS Gross Margin % of Saas Revenue $0.1 $0.7 $0.8 $1.2 $1.3 $1.7 $1.9 $0.4 13% 10% 11% 12% 12% 16% 19% 15% 2018 2019 2020 2021 2022 2023 2024 Q1 2025 BDC Revenue Gross Margin BDC Gross Margin % of BDC Revenue
Page 9
9 Market Data (as of May 16, 2025) Capitalization ($CAD Millions) Share Price Performance – Past Year Ownership * Please refer to the “Non-GAAP Measures” and “Glossary of Terms and Acronyms” slides in the Appendix of this presentation for the meaning of this term or acronym Capital Share Price Performance – Past Two Years Other Shareholders Dealerships (Estimate) Directors and Mgmt. Debt Facilities (as of March 31, 2025): • $3.7 million BDC Capital debt • Mezzanine loan of $2.8 million at 10.55% over 6 yrs. • Cash Flow loan of $0.9 million at 7.55% over 6 yrs. • $1.3M unsecured government debt • Paid down $0.3 million on BDC Capital debt in Q1 2025 (compared to $0.9 million in Q1 2024), and an additional $0.5 million on May 8th, 2025 (Q2 2025). Last Equity Raise in November 2019: Shares Issued: 10.6 million Issue Price: $0.87/share Gross Proceeds: $9.2 million Institutional ownership represents over 55% of total outstanding shares. Open: $0.70 Close: $0.94 High: $1.00 Low: $0.70 Shares Traded: 4,597,379 Outstanding: 73,610,051 Open: $0.58 Close: $0.94 High: $1.00 Low: $0.42 Shares Traded: 18,156,360 Outstanding: 73,610,051
Page 10
10 Executive Leadership Team Maury Marks, CPA, CA President, Chief Executive Officer & Founder Marilyn Bown, CPA, CGA Chief Financial Officer Rick Johnston VP Product Management Bruce Atkinson VP Operations Jane Webb VP Sales & Marketing Yossi Ronnen VP Software Development
Page 11
11 Board of Directors Scot Eisenfelder Managing Director SERV Holdings Maury Marks President & Chief Executive Officer Quorum Information Technologies Inc. Greg Pollard Corporate Director Jon Hook Senior Analyst Voss Capital LLC William Nurthen Chief Financial Officer Research Solutions, Inc. Damien Leonard President Pinetree Capital Inc.
Page 12
Appendix 12
Page 13
13 Acquisition History Acquisition Date September 1, 2017 October 31, 2018 January 2, 2019 April 1, 2022 June 23, 2023 Consideration Paid Cash $ 875,000 $ 9,625,000 $ 485,000 $ 4,050,000 $ 150,000 Equity (QIS Common Shares) Powerband Global Inc. (4,956,897 shares at $0.58/share) $ 2,875,000 Robert Quirion (2,586,207 shares at $0.58/share) $ 1,500,000 Scott Savage (78,125 shares at $0.64/share) $ 50,000 Keith Gubler (78,125 shares at $0.64 /share) $ 50,000 Earn-Out (Over Two Years) $ 600,000 Rick Johnston (540,000 RSU at $0.68/share) $ 367,200 Hold Back (paid September 30, 2022 on metrics achieved) $ 414,414 Hold Back (to be paid if metrics are achieved) $ 520,000 Total Consideration Paid $ 1,242,200 $ 14,000,000 $ 1,185,000 $ 4,464,414 $ 670,000* TTM Revenue at Acquisition SaaS Revenue $ 392,000 $ 6,960,000 $ 1,136,000 $ 1,500,000 Service Revenue $ 392,000 $ 4,791,000 One-Time Revenue $ 613,000 $ 35,000 Total Revenue $ 392,000 $ 12,364,000 $ 1,171,000 $ 1,500,000 *The acquisition of VINN Automotive Inc. for $670,000 includes $11.3 Million of Non-Capital Losses.
Page 14
14 Peer Benchmarking Courtesy of: Sources: Public filings and S&P Capital IQ; as at May 16, 2025 Note: EBITDA multiples considered non-material (“n.m.”) when less than 0.0x Share Market Enterprise Share Price Perf. Revenue EV / Rev. Rev. Growth EBITDA EV / EBITDA EBITDA Margin FCF Margin Company Price Cap. Value YTD 1-Year LTM LTM 2024-25 LTM LTM LTM LTM (C$) (C$ MM) (C$ MM) (C$ MM) (C$ MM) Canadian Software Peers Tecsys Inc. $42.00 $623 $592 (8%) 22% $174 3.4x 10% $12 49.9x 7% 6% Sangoma Technologies Corporation $8.01 $268 $333 (20%) 24% $342 1.0x (5%) $57 5.8x 17% n.a. Tiny Ltd. $0.85 $159 $259 (48%) (70%) $193 1.3x 12% $28 9.4x 14% n.a. Sylogist Ltd. $9.53 $223 $232 7% 4% $64 3.6x 4% $15 15.9x 23% 18% Optiva Inc. $0.95 $6 $152 (65%) (84%) $68 2.3x n.a. n.a. n.a. n.a. n.a. Thinkific Labs Inc. $2.70 $184 $112 (10%) (30%) $99 1.1x 6% $5 22.1x 5% 1% Voxtur Analytics Corp. $0.02 $15 $67 (60%) (76%) $46 1.5x n.a. ($4) n.m. n.a. n.a. BeWhere Holdings Inc. $0.81 $72 $68 14% 98% $18 3.9x n.a. n.a. n.a. n.a. n.a. Edge Total Intelligence Inc. $0.35 $28 $31 (53%) (36%) $4 7.2x n.a. n.a. n.a. n.a. n.a. NamSys Inc. $1.43 $38 $30 24% 64% $7 4.1x n.a. n.a. n.a. n.a. n.a. Median (15%) (13%) 2.8x 6% $13 15.9x 14% 6% Average (Excluding High / Low) (22%) (12%) 2.7x 7% $15 15.8x 13% 6% Average (22%) (8%) 2.9x 5% $19 20.6x 13% 8% Quorum Information Technologies Inc. $0.94 $69 $74 (1%) 34% $40 1.9x 1% $8 8.9x 21% n.a.
Page 15
15 Glossary of Terms and Acronyms The following is a list of acronyms used within this presentation, and what they stand for: ACA Accessible Accessories, a division of Quorum ARR Annual Recurring Revenue AV Autovance, a division of Quorum BDC Business Development Centre; a recurring revenue stream for Quorum CRM Customer Relationship Management, a Quorum software product solution DM DealerMine, a division of Quorum EV Enterprise Value ER Enterprise Reporting, a Quorum software product solution ERP Enterprise Resource Planning, a Quorum software product solution LTM Last Twelve Months ROI Return on Investment SaaS Software as a Service; a recurring revenue stream for Quorum Shares I&O Shares Issued & Outstanding TEV Total Enterprise Value TTM Trailing Twelve Months VINN VINN Automotive Technologies, a division of Quorum
Page 16
16 Non-GAAP Measures The following is a list and definition of the non-GAAP measures (NGMs) used within this presentation. A full reconciliation of these non-GAAP measures to their corresponding GAAP measures, as well as the stated usefulness of these non-GAAP measures can be found in Quorum’s 2024 Annual MD&A. Annual Revenue Run Rate – this represents the total revenue in the last quarter of the current period, multiplied by 4. Recurring Revenue – represented by adding SaaS and BDC revenue. Annual Recurring Revenue (ARR) Run Rate – current reported quarter revenue multiplied by four for both SaaS and BDC revenue. Adjusted EBITDA – Net income (loss) before interest and financing costs, taxes, depreciation, amortization, stock-based compensation, impairment, gain on bargain purchase, one-time acquisition-related expenses and restructuring fees. Cash EBITDA – Adjusted EBITDA less stock-based compensation, one-time acquisition-related expense, repayment of lease liability, purchase of property and equipment and software development costs. Net Debt – Total debt less cash. Management uses the net debt metric to monitor the Corporation’s financial leverage and believes that this metric is useful to investors as it provides insight into its financial strength. Total Debt/Cash EBITDA – Total debt divided by Last Twelve Months (“LTM”) Cash EBITDA.
Page 17
17 Thank You Maury Marks, B. Mgt., CPA, CA President, Chief Executive Officer & Founder T elephone: (403) 777-0036 Email: investors@quoruminfotech.com You can find more information on Quorum at: • Quorum InvestorWebsiteat www.quoruminformationsystems.comwhere you can also sign up to receive by email our News Releases and Upcoming Event Notifications. • Follow us on LinkedIn - Quorum Information Technologies Inc.