QMCI - QuoteMedia Inc. (QMCI) - More Fish Appear To Be Nibbling

Close enough. Total Q3 revenue increased a solid 21.6% to $3.819 million, compared with our $3.940 million estimate. Each of the company's segments were a hair below our estimates, with its Individual Quotestream segment having the largest variance, with revenues of $0.571 million compared with our $0.625 million estimate. Adjusted EBITDA increased a strong 99% to $540,000, slightly below our estimate of $575,000.Gross margin expansion was deceiving. Q3 gross margins were 46.8% compared with 45.7% in the year earlier quarter, but reflected non-recurring credits which benefited margins over 200 basis points. While gross margins should increase as revenues grow, margin expansion will be influenced by product mix. We assume base gross margins of 44%. Q4 outlook. Based on current trends and assuming no additional large client in the quarter, we are tweaking our Q4 revenue estimate from $4.03 million to $4.00 million. Given higher margin expectations, we are raising our Q4 adj. EBITDA estimate from $450,000 to $501,000. Maintaining 2022 estimates at this time. Management seemed sanguine about adding significant new customers. In addition, there are compelling new products that will come to market beginning in Q4 and into 2022 that should enhance revenue growth. We are maintaining our base line 15% revenue growth estimate, however, until there is visibility of large customer wins. Reiterate Outperform rating. Near current levels, QMCI shares trade at an attractive 10.6 enterprise value to our 2022 adj. EBITDA estimate, at the low end of its recent trading ranges and below that of its peer group. We believe that prospect of an acceleration in revenue growth will be a key catalyst toward higher stock valuations. The recent enhancements to its product features may attract larger clients and accelerate the company's revenue trajectory. The shares are rated Outperform with a $0.25 price target. Read More >>