Intouch Insight’s revenues nosedived in the third quarter as customers slashed spending during the pandemic, the company said Friday – but the firm still posted a fourfold increase in net income thanks to aggressive cost-cutting measures.
The Ottawa software firm that helps clients track customer satisfaction as well as collect data on issues such as employee health and safety concerns reported revenues of $2.97 million for the three-month period ending Sept. 30, down from $4.9 million a year earlier.
But Intouch Insight (TSX-V:INX) saw its net earnings jump to $510,000 – up dramatically from just under $137,000 in the same quarter a year ago. In addition, the firm’s adjusted EBITDA – that is, its earnings before income tax expenses, financing costs and other costs such as depreciation and amortization are factored in – hit an all-time high of $761,000.
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The Ottawa company, whose customers include the likes of A&W and Sobeys, noted the COVID-19 crisis has pummelled many of its key market verticals.
“Many of the industries that Intouch serves, including retail, convenience stores, grocery, pharmacy, hotels and restaurants, continue to feel the ongoing impacts of the COVID-19 pandemic,” the company said in financial statements filed this week.
Recovery ‘may have setbacks’
While company officials said they expect better days ahead, their short-term outlook remains cautious.
“Although we know the pandemic is temporary, the recovery is not expected to be quick and may have setbacks,” the company said. “In Q3 we were very pleased to see several programs restarting, and more are planned to resume in Q4 or early 2021. As a result, revenues are expected to increase again in Q4 but will still fall significantly short of prior year levels.”
Still, Intouch Insight also touted several positive developments.
The company said it has continued to sign new customers throughout the pandemic and saw a boost in recurring software revenue in the third quarter as a result of products such as its recently introduced customer experience management platform, LiaCX.
Staff cuts
“Given our performance, and our technology strength, including the LiaCX SaaS platform, Intouch is in a unique position to grow as markets continue to recover,” CEO Cameron Watt said in a statement.
Meanwhile, Intouch was able to decrease operating expenses by more than 50 per cent year-over-year. The company attributed the drop to “decreases in headcount and individual compensation levels which were put in place as a temporary response to the COVID-19 impacts” as well as lower travel expenses and other “cost-containment measures.”
The company says it expects to bounce back strong once the pandemic subsides, predicting “double-digit” revenue growth in 2021.
Intouch shares were trading at 53 cents on the TSX Venture Exchange Friday afternoon, up 11 cents from Thursday’s close.
