10-Q: QuoteMedia Reports Q2 2026 Results, Revenue Up 11%

QuoteMedia, Inc. announced its second quarter 2026 financial results, showing an 11% increase in revenue to $5.45 million, but also reporting a net loss of $362,447 and material weaknesses in internal controls.

Summary

• QuoteMedia, Inc. reported revenue of $5.45 million for the three months ended June 30, 2026, an 11% increase compared to $4.93 million in the same period of 2025.
• For the six months ended June 30, 2026, revenue was $10.98 million, up 13% from $9.75 million in the prior year.
• The company experienced a net loss of $362,447 for the three-month period, compared to a loss of $853,582 in Q2 2025.
• The six-month net loss was $983,059, an improvement from $1,353,393 in the first half of 2025.
• Cash and cash equivalents decreased to $186,986 as of June 30, 2026, from $319,889 at December 31, 2025.
• The company identified material weaknesses in its internal control over financial reporting, specifically a lack of segregation of duties.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to continued net losses, a decrease in cash, and material weaknesses in internal controls, despite revenue growth.

Positives

• Revenue increased by 11% to $5.45 million for the three months ended June 30, 2026, compared to the prior year period.
• Revenue for the six months ended June 30, 2026, increased by 13% to $10.98 million.
• Gross profit margin improved to 50% for the three-month period and 48% for the six-month period, up from 46% and 45% respectively in the prior year.
• Operating expenses, specifically sales and marketing and general and administrative, decreased for the three-month period.
• Net loss for the three-month period improved significantly to $362,447 from $853,582 in the prior year.

Negatives

• The company reported a net loss of $362,447 for the three months ended June 30, 2026, and $983,059 for the six months ended June 30, 2026.
• Cash and cash equivalents decreased by $132,903 to $186,986 as of June 30, 2026.
• Software development expenses increased by 17% for the three-month period and 28% for the six-month period due to lower capitalization of development costs.
• The company identified material weaknesses in its internal control over financial reporting, including a lack of segregation of duties.
• The company operates with a working capital deficit of $4,643,639 as of June 30, 2026.

Risks

• Adverse macroeconomic conditions, including inflation, slower growth or recession, and higher interest rates could materially adversely affect demand for the Company's services.
• New tariffs proposed by the U.S. government could lead to a general slowdown in economic activity, which could negatively impact the business.
• Events in the Middle East and Ukraine could impact global financial markets and potentially the Company's business.
• There is a risk that the company may require additional capital to execute its plan of operation, and there can be no assurance that such capital will be available on commercially reasonable terms.
• Current adverse capital and credit market conditions could limit access to capital, and the company may be unable to raise capital or bear an unattractive cost of capital.

Future Outlook

The company expects similar revenue growth for the remainder of fiscal 2026. Development cost expenses are expected to continue to increase in the short term due to higher expensing of development salaries, but the impact will diminish over time. The company anticipates its bottom line to improve as revenue grows and the impact of capitalized development costs diminishes. For the remainder of 2026, plans include expanding product lines, improving infrastructure, adding features and data, and leveraging AI tools. New deployments of trade integration capabilities are underway. The company may require additional capital, but there is no assurance it will be available on commercially reasonable terms.

Management Comments

• Our revenue increased 11% in Q2 2026 versus the comparative 2025 quarter. Based on revenue already under contract we expect similar revenue growth for the remainder of fiscal 2026.
• Our development cost expense significantly increased this quarter due to a higher percentage of development salaries being expensed rather than capitalized, as more development time was spent on system maintenance and other development activities that did not meet the criteria for capitalization.
• For the remainder of fiscal 2026 we expect our bottom line to improve as our revenue grows and the impact of capitalized development costs diminishes.
• We plan to continue to leverage artificial intelligence (AI) tools, where possible, to automate this process.

Industry Context

StockSavvy.ai notes that QuoteMedia operates in the competitive financial data and software market. The company's focus on recurring revenue through subscriptions for its data APIs and portfolio management systems aligns with industry trends. However, the increasing trend of expensing development costs rather than capitalizing them, while improving short-term cash flow, negatively impacts current earnings and suggests a shift in development strategy or project prioritization.

Comparison to Industry Standards

• The company's gross margin of 48-50% is within a reasonable range for software and data providers, though specific industry benchmarks vary widely based on service type and scale.
• The increase in software development expenses as a percentage of revenue (28% for six months) is higher than some mature software companies but could be indicative of investment in new technologies or platform upgrades, a common practice in the industry.
• The identification of material weaknesses in internal controls is a significant concern and deviates from the standard of robust financial reporting expected from publicly traded companies.

Corporate Governance

Related Party Transactions

• Five-year office lease with 410734 B.C. Ltd. (controlled by David M. Shworan, CEO of Quotemedia Ltd.) effective May 1, 2021, for approximately $6,500 per month. $101,010 was due to 410734 B.C. Ltd. at June 30, 2026.
• Monthly marketing service fee of $3,000 to Bravenet Web Services, Inc. (controlled by David M. Shworan). $83,946 was due to Bravenet at June 30, 2026, related to this agreement.
• On February 25, 2025, Bravenet advanced the Company $69,000 with no fixed repayment terms or interest. $70,368 was due to Bravenet at June 30, 2026, related to this advance.
• $85,817 was owed to David M. Shworan related to an unpaid bonus earned in 2022 at June 30, 2026.
• $153,095 in unreimbursed expenses owed to Keith Randall, CEO of Quotemedia, Inc. at June 30, 2026.

Stakeholder Impact

• Shareholders: Continued net losses and a decrease in cash may impact future share value. Potential dilution from future capital raises is a concern. Material weaknesses in internal controls could lead to restatements or other financial reporting issues.
• Creditors: The company's working capital deficit and potential need for additional financing could impact its ability to meet obligations.
• Employees: Increased expensing of development costs might signal a shift in R&D focus or resource allocation, potentially affecting project timelines or team structures.
• Suppliers: The company's financial position and potential need for capital could influence payment terms or future business relationships.

Next Steps

• Continue to expand product lines and improve infrastructure.
• Add more features and data to existing products and release newer versions.
• Leverage artificial intelligence (AI) tools for automation.
• Continue to focus on marketing Quotestream for brokerage firm deployments.
• Expand into the investment professional market with Quotestream Professional.
• Continue growth of Data Feed Services client base with new international data feed coverage and delivery products.
• Increase sales of Interactive Content and Data APIs, particularly for large-scale enterprise deployments.
• Continue development projects including international exchange data, news, video feeds, fixed-income coverage, and new market information products.

Key Dates

Recommendation

While revenue growth is positive, the persistent net losses, declining cash reserves, and significant material weaknesses in internal controls present substantial risks. The company's ability to secure future financing on favorable terms is also uncertain. The current situation warrants a cautious 'hold' stance, awaiting evidence of improved profitability and remediation of control deficiencies.

Keywords

financial data, market data, software, API, Quotestream, revenue, loss, financial reporting