Q3 earnings were inline with my expectations and I was personally very satisfied with the quarter. Here are my notes:
- 65% QoQ revenue growth and 29% QoQ recurring revenue growth.
- Stripping out the $50k monthly contribution for DealerRewards, the YoY organic growth is 15%. As I previously said, the company can still keep growing organically should Steve need to stall the M&A strategy temporary.
- Non-cash expenses were down 6% QoQ ($477k) despite the 65% QoQ revenue growth.
- Loss from operations was approx. $141k compared to $287k in Q2 2015 (excluding one-time despite settlement which was ~$145k). Excluding the one-time uplisting fee of $25k, the adjusted loss from operations for the quarter was $116k. Based on these numbers, I'm confident the company can still reach positive cash flow even if none of the current warrants become exercised and only has to rely on the $157k in the bank it has. Not to mention that Q4 is seasonally their strongest quarter which only further reduce the cash burn with the increase in revenue.
Excerpts Of particular significance from the MD&A:
"The Company put great focus on operational enhancements in order to increase revenues, and reduce support time and costs. This focus resulted in the Company’ s best quarter to date not just from a revenue perspective but from an operational improvement perspective as well. Steering the company towards product and revenue is critical for the Company and is what is going to allow the Company to keep executing."
"The Company has also continued to have conversations with other targets in an effort to be a consolidator in the marketplace and have several interested parties they are in discussion with."
"The channel also continued to contribute maintaining the lead volume from earlier in the year and the sales operations team continued to execute closing more than 25% of those leads sent in. As the Company adds more referral partners and continues to work to optimize the current partners lead volume will grow and so will organic growth."
Steve is executing and it's showing in the numbers. I can't wait to see what the next quarter looks like. I'd be surprised if the stock doesn't react positively to this report.