Revenue Grew 51% Versus the Prior Year
Bookings Were up 159% and Net New Clients
Increased 20% Versus the Prior Quarter
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 second quarter and first
half of 2022, ended June 30, 2022, including Bookings1 of $4.4
million, representing an increase of 159% compared to Q12022 and a
20% gain in the number of net new clients during the quarter.
Additionally, the Company reaffirmed its previously announced full
year 2022 goals. Results are reported in US dollars and prepared in
accordance with International Financial Reporting Standards
("IFRS").
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“Our innovative technology, solid infrastructure, comprehensive
solutions and editing expertise put us in a unique position to
accelerate growth and increase market penetration globally. Digital
modernization spend continues to increase in our sector and our
differentiated technology, combined with human expertise, helps to
solve our customers’ productivity and delivery challenges amid
labor constraints that are evident in the global verbatim
documentation industry,” said Sebastien Paré, VIQ’s Chief Executive
Officer.
Mr. Paré continued, “After navigating COVID related headwinds
for 26 months, we placed a sharper focus on our key performance
indicators to provide greater transparency and measures of success.
Based on our Bookings and the recovery in our production capacity
for the first half of the year, we anticipate organic revenue
growth, excluding acquisitions, to meet expectations. Bookings,
active clients, production volumes, and annual delivered content
have all increased to new highs in Q2, while the cost to produce a
minute of documentation dropped by 8.5% in Q22022 when compared to
Q12022. We achieved a positive EBIDTA month in June 2022, and we
are on track to achieve positive Adjusted EBITDA in the second half
of the year.”
“We delivered a strong second quarter of 2022 with Bookings of
$4.4 million representing an increase of 159% from Q12022. With our
strong client relationships and comprehensive solution portfolio,
we capitalized on healthy demand across the markets we serve,
adding new orders from existing clients and creating relationships
with new accounts. The significant growth in our bookings is a
positive indicator, and while it takes time to flow through as
revenue, it is expected to positively contribute to future organic
revenue growth,” said Susan Sumner, VIQ’s President and Chief
Operating Officer.
Ms. Sumner continued, “We have also seen consistent improvement
in our gross margin as we work diligently to integrate the volume
from our fourth quarter 2021 acquisitions to take advantage of
productivity gains from implementing NetScribe™, powered by
aiAssist™. Further, during Q22022 we expanded our global workforce
and increased utilization of fixed costs that negatively impacted
Q12022 due to shutdowns of courts.”
Second Quarter 2022 Financial Highlights:
- Revenue of $12.4 million compared to $8.2 million in the same
quarter of 2021;
- Gross profit was $6.1 million, or 49.3% of revenue, compared to
$4.0 million, or 48.6% of revenue, in the same quarter of
2021;
- Net loss was $3.2 million, or $0.11 per diluted share, versus
net loss of $10.5 million, or $0.42 per diluted share, in the same
quarter in 2021; and
- Adjusted EBITDA1 was negative $0.7 million versus a negative
Adjusted EBITDA of $0.3 million in the second quarter of 2021.
First Half of 2022 Financial Highlights:
- Revenue of $23.9 million compared to $16.4 million in the first
half of 2021;
- Gross profit was $11.6 million, or 48.5% of revenue, compared
to $8.0 million, or 48.6% of revenue, in the same period of
2021;
- Net loss was $5.2 million, or $0.17 per diluted share, versus
net loss of $12.2 million, or $0.49 per diluted share in the same
period in 2021; and
- Adjusted EBITDA was negative $1.7 million versus Adjusted
EBITDA of essentially nil in the first half of 2021.
“We saw the recovery in production capacity in June which led to
a positive Adjusted EBITDA for that month. We expect to generate
positive cashflow from operations and improving liquidity in the
back half of 2022, and we are pleased that despite the impact of
the Great Resignation, primarily in Australia, we still expect to
achieve our full year 2022 revenue and gross margin goals,” said
Alexie Edwards, VIQ’s Chief Financial Officer.
_____________________ 1 Please refer to "Non-IFRS Measures"
below in this news release.
2022 Priorities and Reaffirming Goals for Full Year
2022:
VIQ is reaffirming its goals for 2022. Financial expectations
include generating at least $50 million in revenue with an expected
gross margin in the range of 47%-55%.
The growth in Bookings reflects the continued demand for
innovative solutions and services to support the transformation of
document workflows making evidentiary content secure and more
accessible. The Company is poised to continue generating long-term
recurring revenue and SaaS contracts rather than strictly up-front
licensing contracts. The transition has been underway for some time
and is now accelerating amid a return to organic revenue growth
post the COVID era.
Conference Call Details
VIQ will host a conference call and webcast to discuss its
Second Quarter 2022 results on Thursday, August 11 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 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, including negatives thereof, suggesting future outcomes or
that certain events or conditions “may” or “will” occur. These
statements are only predictions. Forward-looking statements or
information in this press release include, but are not limited to
expectations regarding future organic growth, financial
expectations, including expectations for Adjusted EBITDA, trends
regarding digital modernization spend, expectations regarding
post-COVID demand, expected improvements in liquidity, expectations
regarding full year revenue and gross margin and the timing of the
Company's earnings call.
Forward-looking statements or information are 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 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 incremental value for shareholders.
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 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, included
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 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. There can be no assurance that such
estimates and assumptions will prove to be correct. 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 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.
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 Company's revenue and gross margin for the 2022
fiscal year and may not be appropriate for any other purpose. The
financial outlook has been prepared based on a number of
assumptions including the assumptions discussed under the heading
"Forward-looking Statements" above 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 and referred to under the
heading "Forward-looking Statements" above, it should not be relied
on as necessarily indicative of future results.
VIQ Solutions Inc.
Consolidated Statements of Financial
Position
(Expressed in United States dollars,
Unaudited)
June 30, 2022
December 31, 2021
Assets
Current assets
Cash
$
3,491,907
$
10,583,534
Trade and other receivables, net of
allowance for doubtful accounts
5,794,612
5,594,368
Inventories
36,744
49,557
Prepaid expenses and deposits
1,759,941
2,054,793
Non-current assets
11,083,204
18,282,252
Restricted cash
495,187
303,945
Property and equipment
593,949
460,974
Right of use assets
907,472
1,134,493
Intangible assets
13,253,541
14,762,140
Goodwill
11,963,187
12,283,100
Deferred tax assets
584,590
464,800
Total assets
$
38,881,130
$
47,691,704
Liabilities
Current liabilities
Trade and other payables and accrued
liabilities
$
7,120,751
$
5,380,701
Income tax payable
262,393
97,784
Share based payment liability
132,790
551,201
Derivative warrant liability
853,278
1,862,876
Current portion of long-term debt
888,623
1,109,713
Current portion of lease obligations
251,781
287,901
Current portion of contract
liabilities
1,446,077
1,003,187
Non-current liabilities
10,955,693
10,293,363
Deferred tax liability
1,037,454
1,199,266
Long-term debt
7,648,396
11,999,108
Long-term contingent consideration
84,838
166,603
Long-term lease obligations
767,143
900,868
Other long-term liabilities
1,016,331
1,042,938
Total liabilities
21,509,855
25,602,146
Shareholders' Equity
Capital stock
72,317,239
72,191,764
Contributed surplus
5,243,008
4,842,208
Accumulated other comprehensive income
38,021
74,526
Deficit
(60,226,993
)
(55,018,940
)
Total shareholders’ equity
17,371,275
22,089,558
Total liabilities and shareholders'
equity
$
38,881,130
$
47,691,704
VIQ Solutions Inc.
Consolidated Statements of Loss and
Comprehensive Loss
(Expressed in United States dollars,
Unaudited)
Three months ended June
30
Period over Period
Change
Six months ended June
30
Period over Period
Change
2022
2021
$
%
2022
2021
$
%
Revenue
12,351,655
8,191,812
4,159,843
51
23,876,636
16,446,034
7,430,602
45
Cost of sales
6,257,453
4,210,733
2,046,720
49
12,293,385
8,447,120
3,846,265
46
Gross profit
6,094,202
3,981,079
2,113,123
53
11,583,251
7,998,914
3,584,337
45
Expenses
Selling and administrative expenses
6,532,440
3,953,046
2,579,394
65
12,668,748
7,492,156
5,176,592
69
Research and development expenses
278,357
260,010
18,347
7
477,442
499,673
(22,231
)
(4
)
Gain on contingent consideration
(7,489
)
109,269
(116,758
)
(107
)
96,072
13,275
82,797
624
Stock-based compensation
540,580
6,687,792
(6,147,212
)
(92
)
1,492,776
6,773,787
(5,281,011
)
(78
)
Depreciation
139,853
70,101
69,752
100
275,567
143,656
131,911
92
Amortization
1,079,784
1,118,014
(38,230
)
(3
)
2,103,414
2,292,822
(189,408
)
(8
)
Interest expense
241,128
335,594
(94,466
)
(28
)
580,841
667,013
(86,172
)
(13
)
Accretion and other financing costs
156,307
254,712
(98,405
)
(39
)
289,280
519,661
(230,381
)
(44
)
Loss on revaluation of options
(355,215
)
-
(355,215
)
(100
)
(1,063,662
)
-
(1,063,662
)
(100
)
Gain on revaluation of RSUs
(134,205
)
-
(134,205
)
(100
)
(308,458
)
-
(308,458
)
(100
)
Gain on revaluation of the derivative
warrant liability
(159,964
)
-
(159,964
)
(100
)
(1,046,780
)
-
(1,046,780
)
(100
)
Restructuring Costs
154,727
238,037
(83,310
)
(35
)
169,108
360,253
(191,145
)
(53
)
Business acquisition costs
374,053
-
374,053
-
395,517
-
395,517
-
Other income
(120
)
(4,841
)
4,721
(98
)
(729
)
(8,294
)
7,565
(91
)
Foreign exchange loss
489,803
153,400
336,402
(219
)
748,563
368,725
379,838
(103
)
Loss before income taxes
(3,235,837
)
(9,194,055
)
5,958,218
65
(5,294,448
)
(11,123,813
)
5,829,365
52
Current income tax expense
(110,135
)
(43,348
)
(66,787
)
154
(172,642
)
(1,358
)
(171,284
)
12,613
Deferred income tax recovery (expense)
147,834
(1,261,259
)
1,409,093
(112
)
259,037
(1,040,280
)
1,299,317
(125
)
Income tax recovery (expense)
37,699
(1,304,607
)
1,342,306
103
86,395
(1,041,638
)
1,128,033
108
Net Loss
(3,198,138
)
(10,498,662
)
7,300,525
70
(5,208,053
)
(12,165,451
)
6,957,398
57
Weighted average number of common
shares outstanding
Basic
28,653,056
25,029,019
29,890,785
24,749,637
Diluted
28,653,056
25,029,019
29,890,785
24,749,637
Net income (loss) per share
Basic
(0.11
)
(0.42
)
(0.17
)
(0.49
)
Diluted
(0.11
)
(0.42
)
(0.17
)
(0.49
)
VIQ Solutions Inc.
Adjusted EBITDA
(Expressed in United States dollars,
Unaudited)
Three months ended June
30
Six months ended June
30
(unaudited)
2022
2021
2022
2021
Net Loss
(3,198,138
)
(10,498,662
)
(5,208,053
)
(12,165,451
)
Add:
Depreciation
139,853
70,101
275,567
143,656
Amortization
1,079,784
1,118,014
2,103,414
2,292,822
Interest expense
241,128
335,594
580,841
667,013
Current income tax expense
110,135
43,348
172,642
1,358
Deferred income tax expense (recovery)
(147,834
)
1,261,259
(259,037
)
1,040,280
EBITDA
(1,775,072
)
(7,670,346
)
(2,334,626
)
(8,020,322
)
Accretion and other financing costs
156,307
254,712
289,280
519,661
Gain on revaluation of options
(355,215
)
-
(1,063,662
)
-
Gain on revaluation of RSUs
(134,205
)
-
(308,458
)
-
Gain on revaluation of the derivative
warrant liability
(159,964
)
-
(1,046,780
)
-
Restructuring Costs
154,727
238,037
169,108
360,253
Business acquisition costs
374,053
-
395,517
-
Other income
(120
)
(4,841
)
(729
)
(8,294
)
Stock-based compensation
540,580
6,687,792
1,492,776
6,773,787
Foreign exchange loss
489,803
153,400
748,563
368,725
Adjusted EBITDA
(709,106
)
(341,246
)
(1,659,011
)
(6,190
)
Non-IFRS Measures
EBITDA, Adjusted EBITDA, and Bookings, are not measures
recognized by IFRS and do not have standardized meanings prescribed
by IFRS. Therefore, these terms as used by VIQ may not be
comparable to similar measures presented by other issuers.
Investors are cautioned that EBITDA and Adjusted EBITDA should not
be construed as an alternative to net income (loss) as determined
in accordance with IFRS.
The Company prepares its financial statements in accordance with
IFRS. Non-IFRS measures are used by management to provide
additional insight into our performance and financial condition. We
believe 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.
This news release also includes certain measures which have not
been prepared in accordance with IFRS such as Adjusted EBITDA, and
Bookings.
To evaluate the Company’s operating performance as a complement
to results provided in accordance with IFRS, the term “EBITDA”
refers to net income (loss) before adjusting earnings for
depreciation, amortization, interest expense, and current and
deferred income tax expense. 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 repayment of long-term debt, business
acquisition costs, impairment of goodwill and intangibles, other
expense (income), foreign exchange (gain) loss, and current and
deferred income tax expense. We believe that the items excluded
from EBITDA and Adjusted EBITDA are not connected to and do not
represent the operating performance of the Company. The term
“Bookings” refers to the annualized estimated monthly value of our
recurring client contracts entered into during the period from (i)
new clients and (ii) net upgrades by existing clients within the
same workload, plus the actual (not annualized) estimated value of
professional services consulting, advisory or project-based orders
received during the period. Recurring client contracts are any
contracts entered into on a multi-year or month-to-month basis, but
excluding any professional services contracts for consulting,
advisory or project-based work.
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, 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.
We believe that Bookings is useful supplemental information as
it measures the amount of new business generated in a period, which
we believe is an important indicator of new client acquisition and
our ability to cross-sell new services to existing clients. While
we believe Bookings, in combination with other metrics, is an
indicator of our near-term future revenue opportunity, it is not
intended to be used as a projection of future revenue. Our
calculation of Bookings may differ from similarly titled metrics
presented by other companies.
For a reconciliation and/or calculation of Adjusted EBITDA and
Bookings, please refer to the section entitled "Key Operating
Metrics – Non-IFRS Measures" in the Company's management's
discussion and analysis for the three and six months ended June 30,
2022, which is available on the Company's SEDAR profile at
www.sedar.com.
Trademarks
This press release includes trademarks, such as “NetScribe, and
“aiAssist,” which are protected under applicable intellectual
property laws and are the property of VIQ. Solely for convenience,
our trademarks referred to in this news 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 which may be used in this press
release, other than those that belong to VIQ, are the property of
their respective owners.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220810005820/en/
Media: Laura Haggard Chief Marketing Officer VIQ
Solutions (800) 263-9947 marketing@viqsolutions.com
Investor Relations: Laura Kiernan High Touch Investor
Relations 1-914-598-7733 viq@htir.net
VIQ Solutions (NASDAQ:VQS)
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