VIQ to host analyst and investor call today at
11:00 A.M. ET
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 provides
an update on its growth plans, updated outlook for the third
quarter of 2021 and financial outlook for the full years 2021 and
2022. Additionally, the Company announces it will host an analyst
and investor call today at 11:00 A.M. ET to discuss further
details. All dollar amounts are expressed in U.S. dollars unless
otherwise stated.
As further detailed below, VIQ has achieved significant
corporate milestones this year, putting it in a position to execute
its acquisition roll-up strategy. With the completion of The
Transcription Agency (“TTA”) acquisition and the acquisition of
Auscript Australasia Pty Ltd (“Auscript”), expected to be complete
in the fourth quarter 2021, along with organic growth and the
expected emergence from COVID-19 lockdowns globally in 2022, the
Company is on track to generate at least $50 million in revenue1
with 47%-55% gross margin and 10%-20% adjusted EBITDA margin2 by
the end of fiscal 2022.
“With several of our large Legal Court and Law Enforcement
clients in Australia operating at 50% of normal capacity due to the
prolonged shutdowns, the last three months have been a particularly
challenging period from an operations and capital markets
perspective. However, we believe we have managed through the
pandemic well, fortified our balance sheet, and taken the steps
necessary to execute our roll-up strategy and long-term growth
plan, despite global M&A delays due to COVID-19 and
international travel restrictions. We are in a strong position from
a competitive standpoint and are rolling out FirstDraft, powered by
AI, which will drive our revenue mix toward a more scalable, higher
margin SaaS model,” said Sebastien Paré, VIQ's Chief Executive
Officer.
The Company’s management and board of directors (the “Board”)
collectively represent the single largest shareholder group of VIQ,
with over 27% ownership prior to the U.S. only registered direct
offering (the “RDO”) completed on September 15 and hold
approximately 24% ownership of the issued and outstanding shares of
the Company (on a fully diluted basis) after completion of the
RDO.
Mr. Paré continued, “The Board and management wish to
acknowledge they were disappointed by the market’s reaction to both
the revised near-term outlook issued on July 30 and the RDO. We
believe that raising capital was needed to close on accretive
acquisitions and onboard significant new institutional
shareholders. At this time in our growth trajectory, we are
emerging from the COVID-19 pandemic in a strong position in a
global industry digitizing at a fast pace to accommodate the new
delivery expectations.”
“On August 12, VIQ’s shares began trading on Nasdaq following,
our graduation to the TSX in Canada in January. Just last year, we
were considered a venture company, and in 2021, we are listed
nationally on big boards both in Canada and the U.S. This year’s
equity trading volumes have leapfrogged prior year volumes on the
TSXV and OTCQX. Our listings on the Nasdaq and TSX, coupled with
strong trading liquidity, are expected to facilitate increased
investment by institutional shareholders globally,” stated Alexie
Edwards, VIQ's Chief Financial Officer.
Update on Long-term Global Growth Plans
“The senior exchange listings and a strategic capital raise were
necessary to enable us to continue executing our accretive roll-up
strategy which has accelerated with many new global opportunities.
We believe the acquisition of TTA, the leading supplier of secure
outsourced transcription services to clients in private and public
sectors throughout the United Kingdom, will enable us to expand our
presence in the U.K. where we now have post Brexit compliant,
jurisdictional access,” said Susan Sumner, VIQ President and Chief
Operating Officer.
“Additionally, our planned acquisition of Auscript this quarter
enables VIQ to provide exceptional service and enhance the quality
of delivery for all Australian clients with an opportunity to
leverage our innovative technology offerings while improving our
overall margin profile,” added Ms. Sumner.
Third Quarter 2021 Outlook
Though the Company is still in the process of closing its third
quarter results, it is providing an interim update and expects to
report revenue in the range of $7.0-$7.1 million and gross margin
in the range of 48% to 49%1 for the third quarter of 2021. The
revenue outlook for the quarter is below previously issued guidance
primarily because of prolonged COVID-19 shutdowns in the States of
New South Wales and Victoria in Australia, where some of the
Company's largest customers are located. These shutdowns delayed
new contracts and significantly reduced, albeit temporarily, the
Court and Law Enforcement production volumes in the quarter.
Additionally, labor shortages in the U.S. drove increased operating
costs despite reduced volumes during the last quarter.
Clients in the States of New South Wales and Victoria are
expected to resume normal production in November when 80% of the
population is expected to be double vaccinated. In the U.S., labor
shortages are slowly being reduced as the direct U.S. Government to
independent contractor subsidies are ending. Pent-up demand caused
by these delays is expected when volume production resumes. As a
result, demand has developed, creating opportunities for
FirstDraft, powered by aiAssist™ to help alleviate the operational
pressure for quality, faster turnaround timelines, and new delivery
expectations in post-pandemic digitization. The Company’s full
earnings announcement is expected to be issued mid-November
2021.
Goals for Full Year 2021 and 2022:
The Company’s expectations for the 2021 fiscal year are to
achieve revenue in the range of $34 to $35 million with gross
margin in the 48%-50% range1.
The Company’s revised Queensland contract, previously announced
December 2020, was expected to begin during the third quarter of
2021. This $5+ million annualized contract is now expected to
commence sometime in the first half of 2022.
The Company’s goals for 2022 include a full year of normalized
revenue for TTA and Auscript, the new organic growth contracts
delayed in 2021, and processing the backlog related to COVID-19
shutdowns. Financial expectations include generating at least $50
million in revenue with 47%-55% gross margin1 and 10%-20% adjusted
EBITDA margin2.
“Over the past nine months, VIQ has achieved some significant
milestones, and we are positioned to elevate our consolidated
revenue and margin structure next year as we expect to see
additional tangible evidence in our results that our strategy is
working,” Mr. Edwards added.
Financial Strategy Milestones Achieved During 2021:
- Graduated to the Toronto Stock Exchange - January 2021;
- Filed a Base Shelf Prospectus in Canada and Form F-10 in the
U.S. - June 2021;
- Filed a Prospectus Supplement and listed on Nasdaq Capital
Market - August 2021;
- Filed Prospectus Supplement and raised $18 million through a
RDO in the U.S. - September 2021;
- Established VIQ UK, enabling the launch of Netscribe™, powered
by aiAssist, in all global commercial geographies - September
2021;
- Closed TTA acquisition - October 2021; and
- Announced a binding Asset Purchase Agreement for Auscript -
expected to close in the fourth quarter of 2021.
Mr. Edwards continued, “To match the Company’s strategic revenue
model including SaaS models, using AI as a driver to automate
transcription services, we expect to begin providing enhanced
disclosures of key performance indicators beginning next year.”
Conference Call Details
VIQ’s management will host a conference call today to discuss
the Company’s growth plans followed by a question-and-answer period
at 11:00 A.M. ET. Investors may access a live webcast of the call
on the Company’s website at www.viqsolutions.com/investors or by
dialing 1-888-506-0062 (North America toll-free) or +1-973-528-0011
(international) to be connected to the call by an operator using
conference ID number 747125. 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
VIQ 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.
Non-IFRS Financial Measures
Adjusted EBITDA margin is a non-IFRS financial measure that the
Company uses to assess its operating performance and does not have
any standardized meaning prescribed by International Financial
Reporting Standards (“IFRS”). "Adjusted EBITDA margin" means
Adjusted EBITDA divided by revenue. "Adjusted EBITDA” is also a
non-IFRS financial measure and is not a standardized financial
measure under the financial reporting framework used to prepare the
financial statements of the Company and accordingly might not be
comparable to similar financial measures disclosed by other
issuers. To evaluate the Company’s operating performance as a
complement to results provided in accordance with IFRS, the term
“Adjusted EBITDA”, as defined by management of the Company, 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 conversion feature liability, loss on repayment of long-term
debt, restructuring costs, other expense (income), foreign exchange
(gain) loss, current and deferred income tax expense (recovery).
The Company believes that the items excluded from Adjusted EBITDA
are not connected to and do not represent the operating performance
of the Company. The Company believes that, in addition to
conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate its operating
performance. The Company believes 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, restructuring costs, other expense
(income), and foreign exchange (gain) loss. Accordingly, VIQ
believes that this measure may also be useful to investors in
enhancing their understanding of the Company’s operating
performance. The data presented is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Investors are cautioned that Adjusted EBITDA should not be
construed as an alternative to net income (loss) as determined in
accordance with IFRS. These non-IFRS measures should be read in
conjunction with the financial statements of the Company. For a
reconciliation of Adjusted EBITDA, please refer to "Reconciliation
of Non-IFRS Measures" in the Company's management's discussion and
analysis for the three and six months ended June 30, 2021,
available under the Company's profile on www.sedar.com.
Financial Outlook
This press release contains a financial outlook within the
meaning of applicable Canadian securities laws. The financial
outlook has been prepared by management of the Company to provide
an outlook for the revenue and gross margin for the three and nine
months ended September 30, 2021 and the financial years ended
December 31, 2021 and 2022. The financial outlook has been prepared
based on a number of assumptions including the assumptions
discussed in this press release and under the heading
"Forward-looking Statements" below and assumptions with respect to
market conditions, pricing, and demand. The actual results of the
Company's operations for any period will likely vary from the
amounts set forth in these projections and such variations may be
material. The Company and its management believe that the financial
outlook has been prepared on a reasonable basis. However, because
this information is highly subjective and subject to numerous
risks, including the risks discussed under the heading
"Forward-looking Statements" below, it should not be relied on as
necessarily indicative of future results.
Forward-looking Statements
Certain statements included in this news release constitute
forward-looking statements or forward-looking information 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 or information typically contain
statements with words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "propose", "project" or similar words
suggesting future outcomes or statements regarding an outlook.
Forward-looking statements or information in this news release
include, but are not limited to, the expected time and date of the
analyst and investor call; the expected impact of FirstDraft on the
Company's revenue mix; the expected impact of the Company's
listings and liquidity on its shareholder base; the Company's
position emerging from the COVID-19 pandemic; management's
expectations regarding revenue and gross margin for the three and
nine months ended September 30, 2021 and the financial years ended
December 31, 2021 and 2022; expectations regarding improvement of
market conditions in Australia and the United States; the timing of
the Company's full earnings announcement; expectations regarding
the commencement of the Company's contract in Queensland,
Australia; the Company's non-financial goals and growth plans; the
expected impact of the Company's strategy; the expected closing
date of the proposed Auscript acquisition and the timing for the
disclosure by the Company of key performance indicators.
Forward-looking statements or information is based on several
factors and assumptions which have been used to develop such
statements and information, but which may prove to be incorrect.
Although VIQ believes that the expectations reflected in such
forward-looking statements or information 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 news release, assumptions have been made
regarding, among other things, the market reaction to the Company's
upcoming products; the actions of institutional shareholders; the
timing of Australia and the United States' emergence from the
COVID-19 pandemic; costs of the Company's development and operating
activities; the ability of third parties to meet contractual
commitments; the ability of management to meet internal and
external expectations and timelines; the market reaction to
proposed initiatives and the results of the Company's ongoing due
diligence regarding potential acquisitions. Readers are cautioned
that the foregoing list is not exhaustive of all factors and
assumptions that have been used.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by the Company as of the date of this news 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 base shelf prospectus dated
June 10, 2021 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. There can be no assurance that such estimates and
assumptions will prove to be correct. The forward-looking
statements contained in this news release are made as of the date
of this news release, and the Company expressly disclaims any
obligation to update or alter statements containing any
forward-looking information, or the factors or assumptions
underlying them, whether as a result of new information, future
events or otherwise, except as required by law.
1 See "Financial Outlook" and "Forward-looking Statements"
below. 2 See "Non-IFRS Financial Measures" below.
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version on businesswire.com: https://www.businesswire.com/news/home/20211015005076/en/
Media Contact: Laura Haggard Chief Marketing Officer VIQ
Solutions Phone: (800) 263-9947 Email:
marketing@viqsolutions.com
Investor Relations Contact: Laura Kiernan High Touch
Investor Relations Phone: 1-914-598-7733 Email: viq@htir.net
VIQ Solutions (NASDAQ:VQS)
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