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VIQ Solutions Report First Quarter 2024 Results
[May 13, 2024]

VIQ Solutions Report First Quarter 2024 Results


VIQ Solutions Inc. ("VIQ", "VIQ Solutions" or the "Company") (TSX:VQS), a global provider of secure, AI-driven, digital voice and video capture technology and transcription services, today announces its unaudited financial results for the first quarter ending March 31, 2024. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards ("IFRS").

"This quarter's performance was noteworthy on a number of fronts. Despite the normal seasonality of the Courts segment in January, two of the three months in the quarter generated positive Adjusted EBITDA. Directionally, the Adjusted EBITDA path is the result of the positioning of our technology platform NetScribe aiAssist, the human adoption of industry specific AI, the previously announced cost reductions, price increase adjustments and the launch of some of the larger bookings in our Insurance segment. These drivers have laid the foundation for a continued financial improvement as the year progresses," said Sebastien Pare, CEO of VIQ Solutions.

First Quarter 2024 Financial Highlights

  • Revenue of $9.9 million, a decrease of $0.1 million or 1%, from the same period in the prior year. Excluding the impact of foreign currency exchange, the Company would have reported revenue growth of 0.4% over the same period in the prior year.
  • Gross profit of $4.4 million, which was similar to the same period in the prior year.
  • Net loss of $1.8 million, a decrease of $1.6 million, from the same period in the prior year.
  • Adjusted EBITDA of negative $0.1 million, an improvement of $1 million, or 91%, from the same period in the prior year.

"We are pleased with the significant improvement of approximately $1M to Adjusted EBITDA quarter over quarter and excited about our prospects for 2024. We executed and progressed against the strategic initiatives we set in motion at the beginning of 2023, continuing through the first quarter of 2024, which have resulted in significant cost reductions. Improving VIQ's Adjusted EBITDA performance continues to be a top priority," said Alexie Edwards, VIQ's Chief Financial Officer.

First Quarter 2024 Operational Highlights

  • As of the end of March 2024, 50% of VIQ's available work in Australia was migrated to the Netscribe aiAssist platform which will drive improved gross margins.
  • Volume gains seen in the Insurance vertical with a new US client that ranks in the Top 5 U.S. Insurance carriers. The trend in higher volumes is expected to continue.
  • Implemented price increases have continued to provide a lift to revenues.
  • Client adoption and utilization of FirstDraft under SaaS contracts is increasing.
  • Australia's market demand remains strong, which is reflected by improving volumes.
  • As a result of our Domain Specific Language Models (DSLM's), the Company anticipates an increase in SaaS revenue driven by high "usability and accuracy" of the drafts that VIQ is delivering to customers.

"Q1, which is heavily impacted by seasonality in Australia, is typically the lowest revenue generating quarter of the year. Our technology platform migrations in Australia to Netscribe is being embraced not only by our transcribers but also by our customers that are not only adapting to the technology but engaging to accelerate disruption within the courts and legal sectors. Our results in the first quarter, show we are delivering as expected, in particular, we are encouraged by the recovery of our run rate in U.S. verticals such as insurance and criminal justice. We are also excited by the long-awaited implementation of one of the top insurance companies in the U.S. This organic win is a meaningful contract that will help fuel and fortify favorable trends in 2024. Innovations that will be released in the next quarter will top off the requirements to fully execute and solidify our position as both the services and technology lead in all the geographies where we operate", said Susan Sumner, VIQ's President and Chief Operating Officer.

1 Represents a non-IFRS measure. Non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Management believes non-IFRS measures, including Adjusted EBITDA, provide supplementary information to IFRS measures used in assessing the performance of the Company's business. Please refer to the "Non-IFRS Measures" section below and the reconciliations of the non-IFRS financial measures to their most directly comparable IFRS financial measures in the tables at the end of this press release.

A copy of the Company's unaudited financial statements and accompanying MD&A for the three months ended March 31, 2024 (collectively, the "Financial Information") will be available under the Company's profile on SEDAR+ at www.sedarplus.ca.

Conference Call Details

VIQ will host a conference call and webcast to discuss the Financial Information on May 14, 2024 at 11:00 a.m. (Eastern time). The call will consist of updates by Sebastien Paré, VIQ's Chief Executive Officer, Alexie Edwards, VIQ's Chief Financial Officer, and Susan Sumner, VIQ's President and Chief Operating Officer, followed by a question-and-answer period.

Investors may access a live webcast of the call on the Company's website at www.viqsolutions.com/investors or by dialing 1-888-440-4052 (North America toll-free) or +1-646-960-0827 (international) to be connected to the call by an operator using conference ID number 4983233. Participants should dial in at least 10 minutes prior to the start of the call.

A replay of the webcast will be available on the Company's website through the same link approximately one hour after the conference call concludes.

About VIQ Solutions

VIQ Solutions is a global provider of secure, AI-driven, digital voice and video capture technology and transcription services. VIQ offers a seamless, comprehensive solution suite that delivers intelligent automation, enhanced with human review, to drive transformation in the way content is captured, secured, and repurposed into actionable information. The cyber-secure, AI technology and services platform are implemented in the most rigid security environments including criminal justice, legal, insurance, government, corporate finance, media, and transcription service provider markets, enabling them to improve the quality and accessibility of evidence, to easily identify predictive insights and to achieve digital transformation faster and at a lower cost.

Forward-looking Statements

Certain statements included in this press release constitute forward-looking statements or forward-looking information (collectively, "forward-looking statements") under applicable securities legislation. Such forward- looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

Forward-looking statements (typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words, including negatives thereof, suggesting future outcomes or that certain events or conditions "may" or "will" occur). These statements are only predictions. Forward-looking statements in this press release include but are not limited to statements with respect to the Company's improved 2024 performance, including to gross margin, the Company's focus and its priorities, expected higher volumes, increases in SaaS sales and the evolution of sectors in 2024, the filing of the Financial Information on SEDAR+ and the conference call to discuss the Company's financial results.

Forward-looking statements are based on several factors and assumptions which have been used to develop such statements, but which may prove to be incorrect. Although VIQ believes that the expectations reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements because VIQ can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding, among other things, recent initiatives, cost savings from workforce optimization, cost reductions from the Company's workflow solutions and that sales and prospects may increase revenue. In addition to other factors and assumptions that may be identified in this press release, assumptions have been made regarding, among other things, recent initiatives, cost savings from workforce optimization, cost reductions from the Company's workflow solutions, and that sales and prospects may increase revenue. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions that have been used.

Forward-looking statements are necessarily based on a number of opinions, assumptions and estimates that while considered reasonable by the Company as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to the factors described in greater detail in the "Risk Factors" section of the Company's annual information form and in the Company's other materials filed with the Canadian securities regulatory authorities.

These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. Such estimates and assumptions may prove to be incorrect or overstated. The forward-looking statements contained in this press release are made as of the date of this press release and the Company expressly disclaims any obligations to update or alter such statements, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.





 

VIQ Solutions Inc.

 

 

Interim Condensed Consolidated Statements of Financial Position

 

 

(Expressed in US dollars, unaudited)

 

 

 

March 31,
2024

December 31,
2023

Assets

 

 

Current assets

 

 

Cash

$

2,221,509

 

$

1,621,778

 

Trade and other receivables, net of allowance for doubtful

accounts

 

4,827,117

 

 

4,382,668

 

Inventories

 

31,497

 

 

29,146

 

Prepaid expenses and deposits

 

1,224,121

 

 

1,636,349

 

 

Non-current assets

 

8,304,244

 

 

7,669,941

 

Restricted cash

 

176,778

 

 

185,655

 

Property and equipment

 

934,252

 

 

1,066,194

 

Right-of-use assets

 

484,861

 

 

596,063

 

Intangible assets

 

7,417,504

 

 

8,066,733

 

Goodwill

 

11,861,876

 

 

12,090,609

 

Total assets

$

29,179,515

 

$

29,675,195

 

Liabilities

 

 

Current liabilities

 

 

Trade and other payables and accrued liabilities

$

6,537,747

 

$

6,269,023

 

Income tax payable

 

72,049

 

 

59,044

 

Share-based payment liability

 

24,537

 

 

25,246

 

Derivative warrant liability

 

127,072

 

 

188,042

 

Current portion of long-term debt *

 

13,811,491

 

 

19,812

 

Current portion of lease obligations

 

464,135

 

 

483,362

 

Current portion of contract liabilities

 

1,786,184

 

 

1,809,003

 

Non-current liabilities

 

22,823,215

 

 

8,853,532

 

Long-term debt *

 

-

 

 

13,246,176

 

Long-term lease obligations

 

123,720

 

 

220,750

 

Other long-term liabilities

 

1,033,879

 

 

1,179,639

 

Total liabilities

 

23,980,814

 

 

23,500,097

 

Shareholders' Equity

 

 

Capital stock

 

77,403,488

 

 

76,230,158

 

Contributed surplus

 

8,674,321

 

 

8,671,879

 

Accumulated other comprehensive loss

 

(982,819

)

 

(670,788

)

Deficit

 

(79,896,289

)

 

(78,056,151

)

 

 

 

 

 

5,198,701

 

 

6,175,098

 

Total liabilities and shareholders' equity

$

29,179,515

 

$

29,675,195

 


* The Company obtained a waiver on April 30, 2024 from Beedie for the non compliance of the Maximum Total Secured Debt Leverage financial covenant for the month of March 2024. As a result, the principal amount of Note Payable and paid in kind interest owing remains due to be repaid in January 2027

 

VIQ Solutions Inc.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
(Expressed in US dollars, unaudited)

Three months ended March 31,

 

2024

 

 

2023

 

Revenue

$

9,921,673

 

$

10,052,571

 

Cost of Sales

 

5,529,115

 

 

5,624,614

 

Gross Profit

 

4,392,558

 

 

4,427,957

 

Expenses

 

 

Selling and administrative expenses

 

4,310,774

 

 

5,361,301

 

Research and development expenses

 

165,110

 

 

144,809

 

Stock based compensation

 

28,533

 

 

333,292

 

Gain on revaluation of RSUs

 

(28,777

)

 

(56,946

)

(Gain) loss on revaluation of the derivative warrant liability

 

(57,165

)

 

158,752

 

Foreign exchange loss

 

102,833

 

 

237,018

 

Depreciation

 

194,894

 

 

226,159

 

Amortization

 

806,457

 

 

1,130,303

 

Interest expense

 

388,924

 

 

333,836

 

Accretion and other financing costs

 

326,878

 

 

163,716

 

Gain on contingent consideration

 

-

 

 

(10,389

)

Impairment of property and equipment

 

-

 

 

157,464

 

Restructuring costs

 

(9,694

)

 

27,412

 

Other income

 

(11,205

)

 

(5,094

)

Total expenses

 

6,217,652

 

 

8,201,633

 

Current income tax expense

 

15,044

 

 

7,362

 

Deferred income tax recovery

 

-

 

 

(321,357

)

Income tax expense (recovery)

 

15,044

 

 

(313,995

)

Net loss for the period

$

(1,840,138

)

$

(3,459,681

)

Exchange gain (loss) on translating foreign operations

 

(312,031

)

 

12,348

 

Comprehensive loss for the period

$

(2,152,169

)

$

(3,447,333

)

 

Net loss per share

 

 

Basic

 

(0.04

)

 

(0.10

)

Diluted

 

(0.04

)

 

(0.10

)

Weighted average number of common shares outstanding - basic

 

44,782,398

 

 

34,649,697

 

Weighted average number of common shares outstanding - diluted

44,782,398

 

34,649,697

The following is a reconciliation of Net Loss to Adjusted EBITDA, the most directly comparable IFRS measure for the three months ended March 31, 2024, and 2023:

Three months ended
March 31

(Unaudited)

2024

2023

Net Loss

(1,840,138)

(3,459,681)

Add:

 

 

Depreciation

194,984

226,159

Amortization

806,457

1,130,303

Interest expense

388,924

333,836

Current income tax expense

15,044

7,362

Deferred income tax recovery

-

(321,357)

EBITDA

(434,729)

(2,083,378)

Accretion and other financing costs

326,878

163,716

Gain on revaluation of RSUs

(28,777)

(56,946)

Loss (Gain) on revaluation of the derivative warrant liability

(57,165)

158,752

Impairment of intangible assets

-

157,464

Restructuring Costs

(9,694)

27,412

Other Income

(11,205)

(5,094)

Stock-based compensation

28,533

333,292

Foreign exchange loss

102,833

237,018

 

 

Adjusted EBITDA

(83,326)

(1,067,764)

 

Non-IFRS Measures

The Company prepares its financial statements in accordance with IFRS. Non-IFRS measures are provided by management to provide additional insight into our performance and financial condition. VIQ believes non-IFRS measures are an important part of the financial reporting process and are useful in communicating information that complements and supplements the consolidated financial statements. Adjusted EBITDA is not a measure recognized by IFRS and do not have standardized meanings prescribed by IFRS. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.

To evaluate the Company's operating performance as a complement to results provided in accordance with IFRS, the term "Adjusted EBITDA" refers to net income (loss) before adjusting earnings for stock-based compensation, depreciation, amortization, interest expense, accretion, and other financing expense, (gain) loss on revaluation of options, (gain) loss on revaluation of restricted share units, gain (loss) on revaluation of derivative warrant liability, restructuring costs, (gain) loss on revaluation of conversion feature liability, loss on extinguishment of long-term debt, loss on modification of debt, business acquisition costs, impairment of property and equipment, impairment of goodwill and intangibles, other expense (income), foreign exchange (gain) loss, current and deferred income tax expense. We believe that the items excluded from Adjusted EBITDA are not connected to and do not represent the operating performance of the Company.

We believe that Adjusted EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed as well as expenses related to stock-based compensation, depreciation, amortization, impairment of goodwill and intangibles, loss on modification or extinguishment of debt, other expense (income), and foreign exchange (gain) loss. Accordingly, we believe that this measure may also be useful to investors in enhancing their understanding of the Company's operating performance.

Trademarks

This press release includes trademarks, such as "NetScribe", which are protected under applicable intellectual property laws and are the property of VIQ. Solely for convenience, our trademarks referred to in this press release may appear without the ® or TM symbol, but such references are not intended to indicate, in any way, that we will not assert our rights to these trademarks, trade names, and services marks to the fullest extent under applicable law. Trademarks that may be used in this press release, other than those that belong to VIQ, are the property of their respective owners.


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