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 three and nine months ended September 30, 2022. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”).
“Our customers and the market are moving away from large technology purchases to buying and engaging on a monthly basis over the course of a contract. As a result, we are in the midst of a transition toward a subscription-based annual recurring revenue (ARR) model. Over time, we expect this will manifest in the financial results with higher revenue and overall margins, and more consistent monthly and annual revenues. Additionally, we believe it will improve the customer lifetime value,” said Sebastien Paré, Chief Executive Officer, VIQ.
“This past quarter we continued to transition our contract with the much-anticipated large customer in Australia. This also follows the acquisition of Auscript in Australia, the Company’s largest acquisition to date. The overall integration of Auscript temporarily pressured our margins and we expect that, once fully integrated, we will normalize gross margins above 50% and positive Adjusted EBITDA margins,” said Susan Sumner, President and Chief Operating Officer of VIQ.
Third Quarter 2022 Financial Highlights
- Revenue of $11.8 million compared to $7.1 million in the same quarter of 2021, up 66%, driven by the acquisition of Auscript in Australia and The Transcription Agency (“TTA”) in the United Kingdom. This was partially offset by negative foreign currency impacts on revenue outside of the US due to the appreciation of the US dollar relative to foreign currencies;
- Gross profit was $5.6 million, or 47.3% of revenue, compared to $3.6 million, or 51.4% of revenue, in the same quarter of 2021. Excluding COVID-19 wage subsidies, Gross Profit Margin for Technology Services1 for the three months ended September 30, 2022, would be 44.6% versus 43.9% in the comparative period in 2021, which has increased due to productivity gains achieved through NetScribe, powered by aiAssist and our global workforce;
- Net loss was $1.3 million, or $0.04 per diluted share, versus net loss of $3.9 million, or $0.15 per diluted share, in the same quarter in 2021; and
- Adjusted EBITDA1 was negative $0.6 million versus a negative Adjusted EBITDA of $3.1 million in the third quarter of 2021. For a reconciliation of net loss to Adjusted EBITDA, please see the table at the end of this press release.
First Nine Months of 2022 Financial Highlights
- Revenue of $35.7 million compared to $23.5 million for the same period of 2021. The increase in revenue of 52% was driven by the acquisitions of Auscript and TTA, partially offset by negative currency impacts;
- Gross profit was $17.1 million, or 48.1% of revenue, compared to $11.6 million, or 49.5% of revenue, for the same period of 2021. Excluding COVID-19 wage subsidies, Gross Profit Margin for Technology Services1 for the nine months ended September 30, 2022, would be 45.9% versus 40.5% in the comparative period in 2021, which has increased due to productivity gains achieved through NetScribe, powered by aiAssist;
- Net loss was $6.5 million, or $0.21 per diluted share, versus net loss of $16.0 million, or $0.63 per diluted share in the same period in 2021;
- Adjusted EBITDA1 was negative $2.2 million versus a negative Adjusted EBITDA of $3.1 million for the same period of 2021. For a reconciliation of net loss to Adjusted EBITDA, please see the table at the end of this press release; and
- Year to date Bookings1 of $7.1 million, of which, approximately 10% were recognized as revenue up to September 30, 2022.
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.
“In addition to our acceleration to an annual recurring revenue model, we are currently focused on the integration of the Australia businesses as well as rightsizing our cost base to enable us to move closer to positive Adjusted EBITDA in 2023. Additionally, we are ramping up our tech-enabled services capacity to recognize revenue for the sizeable new bookings we won this year,” said Alexie Edwards, Chief Financial Officer, VIQ.
Revised Full Year 2022 Financial Goals:
The Company has revised its full year 2022 goals to be in the range of $46-$47 million in revenue and a negative Adjusted EBITDA to be in the range of $2.3 – $2.8 million. Revenue expectations for the year have been revised below the Company’s goal of $50 million as a result of several factors including the negative impact of foreign exchange rates, the timing of execution of new contracts and the ramp up of new bookings, and ongoing labor shortage constraints in some regions that impacted production capacity during the third quarter. The Company’s gross margin goal has been tightened and is expected to be in the range of 48% – 51% for the full year. Although we do not currently expect these negative factors will be recurring, there can be no assurance that our financial performance goals will be achieved.
Conference Call Details
VIQ will host a conference call and webcast to discuss its third quarter 2022 financial results on Thursday, November 10 at 11:00 AM Eastern Time. The call will consist of updates by Sebastien Paré, VIQ CEO, Alexie Edwards, VIQ CFO, and Susan Sumner, VIQ 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.
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, including, Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements 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 implications of the Company transitioning towards a subscription-based ARR model, longer-term benefits resulting from the integration of Auscript, the Company’s focus on the integration of its Australia businesses and rightsizing its cost base to enable VIQ to move toward profitability in 2023, expected gross margin, the Company’s full year 2022 financial goals and the timing of the Company’s earnings call.
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 when made, 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 provide increased 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 information, including but not limited to the factors described in greater detail in the “Risk Factors” section of the Company’s annual information form dated March 31, 2022, in the Company’s annual report form on SEC Form 20-F 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. Although we do not currently expect these negative factors will be recurring, there can be no assurance that our financial performance goals will be achieved.