PHOENIX, Ariz.–(BUSINESS WIRE)–VIQ Solutions Inc. (“VIQ” or the “Company”) (TSX: VQS and OTCQX: VQSLF), a global provider of secure, AI-driven, digital voice and video capture technology and transcription services, today reported unaudited financial results for the first quarter 2021. Results are reported in US dollars and are prepared in accordance with International Financial Reporting Standards (“IFRS”).
“VIQ Solutions delivered strong first-quarter results driven by substantial gross margin improvement, steady increase in our total revenue, and exponential growth in Australia. The positive response to our unique industry transforming approach to AI-powered solutions has been invigorating. Our product portfolio is gaining momentum and we’re keenly focused on strategy and execution,” said Sebastien Paré, Chief Executive Officer. “This is a pivotal year for VIQ as we increase our investment in infrastructure to propel VIQ 3.0 to greater heights using our technology to broaden our portfolio and support the transformation and monetization of the vast amount of digital content recorded within our expanding global markets.”
“We continue to see tangible results from our comprehensive strategy flow through our financial statements. We have started to recapture and recognize the backlog revenue as we enter a post-pandemic environment. We experienced positive proof in Australia, where revenues increased 22.5% in the quarter to $2.4 million versus the prior year,” said Mr. Paré.
President and Chief Operating Officer, Susan Sumner reported, “As we emerge from the Covid-19 slumber, and experience the U.S. become fully operational, we expect U.S. revenues to return to growth. In Q1 we saw US revenues decline 8.6% versus the prior year. However, we saw volumes begin to increase in March, and we expect steady expansion through Q2 as our clients return to pre-pandemic operational levels. By witnessing the reopening improvements in Australia first, we’re confident we’ll also see it in the U.S.”
“Our clients clearly see the value in our ability to implement our integrated solutions and services offerings – powered by cloud and AI – to transform and analyze digital content and securely generate accurate, actionable information. Our FirstDraft™ launch, following the completion of our Beta test with a number of strategic clients in the first half of the year will provide efficient, cost-effective digitizing of billions of recordings captured each year and significantly expand our total addressable market,” concluded Ms. Sumner.
First Quarter 2021 Financial Highlights:
- Revenue of $8.3 million increased 9.4% compared to $7.5 million in the same quarter of 2020. Revenues increased by 22.5% in Australia versus the prior year while U.S. revenues decreased 8.6% due to the impacts of the pandemic mainly in Insurance;
- SaaS, technology and related sales began influencing the gross margin profile with $1.4 million in sales;
- Gross profit of $4.0 million represented 48.7% of revenue compared to $3.2 million, or 42.8% of revenue, in the same quarter of 2020. The increase in gross profit is primarily due to higher software license and support sales as well as productivity gains from the conversion of the Company’s Technology Services clients to the NetScribe™, powered by aiAssist™, platform. This was partially offset by expensed R&D costs associated with the onboarding the Company’s new and larger contract in Australia, which is expected to be operational in the second half of 2021;
- Adjusted EBITDA was $0.3 million versus the same period of the prior year Adjusted EBITDA of $0.6 million. The decrease in Adjusted EBITDA was driven primarily by professional service fees and TSX uplisting fees;
- Net loss in the first quarter was $1.7 million, or loss of $0.07 per diluted share. These results were versus a net loss of $6.7 million, or loss of $0.44 per diluted share, in the same quarter of 2020. Note the prior year period included $5.7 million in one-time, non-cash expenses related to the conversion of Notes to equity during the quarter. The approximate impact on net earnings per share was $0.38. Excluding the impact of this one-time non-cash interest charge, inducement charge and notes revaluation expense related to the convertible note, the net loss per share in the first quarter of 2020 was approximately $0.06;
- Generated 59% of revenue in the United States, 29% in Australia, and 12% in EMEA and Canada;
- During the quarter, the Company graduated to TSX Exchange from the TSX Venture Exchange.
“This quarter’s results indicate we are following through with our strategy,” said Alexie Edwards, VIQ Chief Financial Officer. We continue improving revenue quality by moving towards recurring SaaS accounts, supporting acquisitions through lowest cost liquidity, and improving productivity by migrating our clients onto our NetScribe platform, powered by aiAssist. Additionally, we continue improving our balance sheet and capitalization as we progress towards an uplisting to a senior exchange in the United States.”
The Company reiterates its focus on several 2021 initiatives to drive growth in revenue, profitability, and defensibility, including:
- Driving organic revenue growth through stepped-up investments in infrastructure including AI, sales, marketing, finance and operations;
- Integrating prior acquisitions and driving productivity gains through a technology enabled workforce;
- Migrating clients to the full AI-powered tech stack;
- Further global expansion through net new clients, contracts, and acquisitions;
- Continued development of AI-driven solutions for clients;
- Mitigating impact of COVID-19 on results and process customer backlog;
- Complete and begin to integrate at least two acquisitions.
A core aspect of the Company’s plan is doubling down on AI Machine Learning investments, operational infrastructure, and organic growth driving capabilities. Over time, this is expected to result in high top-line and bottom-line growth driving continued increases in shareholder value.
“We are incredibly pleased that the shareholders overwhelmingly approved the Company’s Omnibus compensation plan, which modernizes our employee compensation structure, makes VIQ competitive for acquiring and retaining talent and enables rewarding performance for key employees. This is increasingly important as we scale the Company globally,” Mr. Paré concluded.
Conference Call Details
VIQ will host a conference call to discuss its first quarter 2021 results on Friday, May 14 at 11:00 AM Eastern Time. The call will consist of a brief update by VIQ’s CEO, Sebastien Paré, 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 1-833-378-1030 (North America toll-free) or +1-236-712-2544 (international) to be connected to the call by an operator using conference ID number 9416367. 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 full release information, please read the press release.
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For more information about VIQ, please visit viqsolutions.com.