VIQ Solutions Reports First Quarter 2023 Financial Results

Earnings Abstract Graphic

PHOENIX, Ariz.–(BUSINESS WIRE)–VIQ Solutions Inc. (“VIQ” or the “Company”) (TSX and Nasdaq: VQS), a global provider of secure, AI-driven, digital voice and video capture technology and transcription services, today reported its unaudited financial results for the first quarter ending March 31, 2023. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”).

“The increasing demand for digital content by global organizations necessitates the implementation of innovative, specialized technology to process data more swiftly and in a secure and precise manner. Transcribers play a critical role in leveraging Artificial Intelligence (AI) to achieve greater productivity and accuracy rates to meet evidentiary standards. We are encouraged by our strong Q1 bookings that represent an increase of 69% from the same period in 2022,” said Sebastien Paré, VIQ’s Chief Executive Officer.

“We are pleased to have completed the migration to the Queensland contract. Despite short-term revenue impacts, it is a crucial step to provide us with revenue predictability as we continue to scale. We believe this contract, combined with the effects of foreign currency exchange, would have normalized quarter-over-quarter revenue showing growth in Australian revenue.” said Sebastien Paré.

First Quarter 2023 Operational Highlights

  • $2.8M1 of net new bookings sold for the quarter, representing 69% increase from Q1 2022.
  • First active installations of NetScribe sold in India for an International Transcription Company.
  • First quarter in full implementation of Queensland contract in Australia.
  • Initial sales closed in the ORdigiNAL agreement.
  • Launched CapturePro Mobile

“As we pivot to meet market demand for SaaS solutions, there will be a positive impact to the revenue mix for organic and run rate revenue. This change is expected to protect long-term revenue and ultimately lead to significant margin improvement but will impact our top line revenue in the short term. Q1 had a slight decline in our U.S. revenue due to the acceleration of SaaS sales in Insurance and Law Enforcement,” said Susan Sumner, VIQ’s President and Chief Operating Officer.

First Quarter 2023 Financial Highlights

  • Revenue of $10.1 million, a decrease of $1.5 million, or 13%, in the same period of the prior year, was primarily due to the expected change in the Queensland contract.
  • Gross profit was $4.4 million, or 44.0% of revenue, compared to $5.5 million, or 47.6% of revenue in the same period of the prior year. The decrease in the gross margin was primarily due to the expected change in the Queensland contract.
  • Net loss of $3.5 million, or $0.10 per diluted share, versus net loss of $2.0 million, or $0.07 per diluted share in the same period of the prior year.
  • Adjusted EBITDA1 deficit of $1.1 million, versus Adjusted EBITDA deficit of $0.9 million in the same period in the prior year. The increase in Adjusted EBITDA deficit was primarily due to decreased gross profit, partially offset by decreased selling and administrative expenses primarily due to lower insurance premiums, reduction in IT related costs due to system integrations and lower headcount related costs due to organizational restructuring.

1 Represents a non-IFRS measure. Please refer to the “Non-IFRS Measures” section below and the reconciliation tables at the end of this press release.

“With a focus on cost-containment and the refinancing in January, we were able to shore up our balance sheet. The new senior debt facility with Beedie Investments Ltd. extends the terms of our lending and will provide additional capacity to fuel our future growth while allowing the Company to execute on our operational plans to drive margin improvement. ” said Alexie Edwards, VIQ’s Chief Financial Officer.

As of March 31, 2023, the Company held a total of $2.5 million in cash. On January 13, 2023, the Company entered a senior debt facility with Beedie Investments Ltd, with maximum available funds of $15 million. Twelve ($12) million of the Loan was provided to the Company as an initial advance with an additional $3 million available to the Company to be drawn in subsequent advances in a minimum of $1 million tranches subject to the Company satisfying certain conditions.

Conference Call Details

VIQ will host a conference call and webcast to discuss its first quarter 2023 financial results on Thursday, May 11, 2023 at 11:00 AM Eastern Time. The call will consist of updates by Sebastien Paré, VIQ’s CEO, Alexie Edwards, VIQ’s CFO, and Susan Sumner, VIQ’s President and COO, 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.

For more information about VIQ, please visit viqsolutions.com.

Read the full release, including Consolidated Financial Statements.

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 strategy, improvements to margins, and the conference call to discuss the Company’s first quarter 2023 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 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 report form on SEC Form 20-F form dated April 3, 2023, and form on SEC Form 20-F/A on April 13, 2023 and in the Company’s other materials filed with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission from time to time, available at www.sedar.com and www.sec.gov, respectively.

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.

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