TOP IDEAS: Latest acquisition makes Quorum Information Technologies Inc. (TSXV: QIS)
twice as big, with more SaaS solutions to serve the auto dealership market in North America. The stock is up 215% since first
Investorfile's share price accumulation
target of $0.40 for Quorum Information Technologies was reached on
August 17, 2015. For the record, we do not revise share price targets for our
Investorfile Top Ideas - Small Cap Value Stocks. We have positioned our blog to
be one of the first providers of a pragmatic perspective of a small cap company
stock's potential worth, where there may be uncovered value that has been
largely overlooked by the investment community.
The Investorfile blog has not posted an update on our
Top Ideas' stock pick Quorum Information Technologies Inc. in over 18 months.
But what has happened since our last post is all good and the share price is up
215% since we first recommended the Company's shares as a small cap value
investment opportunity (See: Quorum
Information Technologies delivers value for auto dealerships and small cap
Quorum Information Technologies Inc.
(TSXV: QIS - $0.63) develops, markets, sells, implements and supports its
proprietary enterprise management software solution called XSELLERATOR for
auto dealerships using a Software-as-a-Service (SaaS) pricing model.
XSELLERATOR is a comprehensive dealership and customer management solution
(DMS) that automates, integrates and streamlines every department within an
auto dealership to save on costs while generating more services revenue for the
auto dealership. A key competitive advantage of XSELLERATOR as a fully
integrated DMS system is its embedded Customer Relationship Management (CRM)
system. Today Quorum's XSELLERATOR software product generates recurring revenues
from a customer base of 359 auto dealership locations, the majority of which
are located within Canada.
Based on its successful foundation in the
DMS market, Quorum's Management team has begun to embark on an aggressive
growth strategy in order capture the lion’s share of auto dealerships'
expenditures for both operational and sales & marketing software tools. As
such, last month the Company made a major acquisition and acquired DealerMine
in Saint John, New Brunswick, Canada, DealerMine is a fast-growing company whose key products and
services for auto dealerships include Service Customer Relationship Management
("CRM") software,Sales CRM software and Business Development
Centre ("BDC") / call centre services. Eighty-five percent of
DealerMine customers’ are auto dealerships in Canada,
and the remaining 15% are U.S.
Quorum’s acquisition of DealerMine is
transformational. The Company now has a annual revenue base of over C$27
million (doubled in size) serving a customer base of 860 auto dealerships
throughout Canada and USA. The Company has stated that the EBITDA and cash flow from
the DealerMine acquisition will be immediately accretive to Quorum’s financial
We see the acquisition of
DealerMine as a key strategic move that will help Quorum form a true
full-service software and services company for the automotive retail sector
across North America.
In addition to this acquisition, Quorum
has made a strategic decision and significant
investments to expand its DMS business into the USA. Because of this, the
Company now has a dedicated U.S.
sales team and, in the last two months, has sold the XSELLERATOR
DMS software to three new dealerships
located in USA while
building a qualified DMS sales pipeline of 25 dealerships in the USA to date. We
see Quorum's dedication to grow in the U.S. market (internally and through
acquisitions) as having many long-term benefits and, also, will make the
Company an attractive takeover target.
At Investorfile we acknowledge that the
stock price of Quorum has performed well for small cap investors who acted on
the blog's initial recommendation. That said, we still feel that the
Company is in the early stages of a multi-year growth trajectory. Given that Quorum is now a much bigger company with a very strong recurring revenue base we feel strongly that more
institutional investors and analysts will be engaged in this story. This could
have a very positive impact on the stock price.
The Company has approximately 60.3 million
Quorum Information Technologies website:
Author Ownership Disclosure: TSXV: QIS - Yes
This article is for informational purposes only. This article is based on the
author's independent analysis and judgment and does not guarantee the
information's accuracy or completeness. The information contained in this
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Investorfile is not engaged in
an investor relations agreement with Quorum Information Technologies Inc. nor
has it received any compensation from Quorum Information Technologies Inc. for
the preparation or distribution of this article.
The author of this article has
acquired and may trade shares of Quorum Information Technologies Inc. through
open market transactions and for investment purposes only.