VQS VIQ Solutions Inc

VIQ Solutions Inc. (“VIQ”, “VIQ Solutions” or the “Company”) (TSX: VQS), a global provider of secure, AI-driven, digital voice and video capture technology and transcription services, is pleased to announce its unaudited financial results for the second quarter ending June 30, 2024. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”).

“The Company delivered a robust Q2 performance, with revenue surging by 10% and gross margin nearing 46%. Our performance underscores the strong momentum of our key margin drivers globally. The substantial increase in Adjusted EBITDA results from bolstering revenue and gross margins associated with the Company's transformation into an AI-workflow operating platform, and successful streamlining and consolidation of our operations. These drivers have set the stage for continued financial improvement as the second half of the year progresses,”. Sebastien Paré, CEO of VIQ Solutions stated.’

Second Quarter 2024 Operational Highlights

• Global Tech-AI migrations: We have successfully completed migrations to the NetScribe AI Assist platform, which has driven improved gross margins.
• Volume Expansion: Volume increases in the Insurance vertical continue to gain momentum. This trend is expected to persist.
• Client Adoption and Utilization: The adoption and utilization of FirstDraft across all segments of revenue have increased, with approximately 120 net new logos added in the quarter.
• Enhanced AI Platform: Higher volumes processed in the AI Platform have strengthened proprietary Domain Specific Language Models (DSLMs) and post-processing, leading to reduced word error rates and lower costs to produce a minute of audio.

"What started in Q1 2024 and accelerated in Q2 2024 is an increased demand for the technologies we have invested in over the last several years. Our core markets have embraced the technologies we deliver, as evidenced by this quarter’s economics. We provided an AI driven platform allowing customers to securely receive content faster and our editors to produce that content more efficiently. This platform has optimized processes, reduced costs and improved margins. We are just beginning. The next generation of this technology will be released in the second half of the year and will redefine the creation of complex documentation. Our upcoming innovations will further solidify our leadership in both services and technology,”. Susan Sumner, COO and President of VIQ stated.

Second Quarter 2024 Financial Highlights

• Revenue of $11.6 million, an increase of $1.1 million or 10%, from the same period in the prior year.
• Gross profit of $5.3 million, an increase of $0.6 million or 14% from the same period in the prior year.
• Net loss of $0.6 million, a decrease of $3 million from the same period in the prior year.
• Adjusted EBITDA1 of $0.8 million, an improvement of $1.7 million, or 181%, from the same period in the prior year.

"We are thrilled to report a significant improvement of approximately $1.7M to Adjusted EBITDA from the same period last year. This growth reflects the success of our strategic productivity margin initiatives, tight cost management and revenue expansion in an industry experiencing rapid modernization due to the integration of AI technology. We remain focused on executing our strategic priorities and financial targets. Enhancing VIQ’s Adjusted EBITDA performance remains a top priority,”. Alexie Edwards, VIQ’s Chief Financial Officer stated.

1 Represents a non-IFRS measure. Non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Management believes non-IFRS measures, including Adjusted EBITDA, provide supplementary information to IFRS measures used in assessing the performance of the Company’s business. Please refer to the "Non-IFRS Measures" section below.

A copy of the Company’s unaudited financial statements and accompanying MD&A for the three and six months ended June 30, 2024 (collectively, the “Financial Information”) will be available under the Company’s profile on SEDAR+ at www.sedarplus.ca.

Conference Call Details

VIQ will host a conference call and webcast to discuss Financial Information on Tuesday August 13, 2024, at 11:00 a.m. (Eastern time). The call will consist of updates by Sebastien Paré, VIQ’s Chief Executive Officer, Alexie Edwards, VIQ’s Chief Financial Officer, and Susan Sumner, VIQ’s President and Chief Operating Officer, 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 at least 10 minutes before the call starts.

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.

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 improved 2024 performance, including to gross margin, the Company’s focus and its priorities, expected higher volumes, increases in SaaS sales and the evolution of sectors in 2024, the filing of the Financial Information on SEDAR+ and the conference call to discuss the Company’s financial 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, cost savings from workforce optimization, cost reductions from the Company’s workflow solutions and that sales and prospects may increase revenue. In addition to other factors and assumptions that may be identified in this press release, assumptions have been made regarding, among other things, recent initiatives, cost savings from workforce optimization, cost reductions from the Company’s workflow solutions, 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 information form and in the Company’s other materials filed with the Canadian securities regulatory authorities.

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.

 

VIQ Solutions Inc.

 

 

Interim Condensed Consolidated Statements of Financial Position

 

 

(Expressed in US dollars, unaudited)

 

 

 

June 30, 2024

December 31, 2023

Assets

 

 

Current assets

 

 

Cash

$

2,101,716

 

$

1,621,778

 

Trade and other receivables, net of allowance for doubtful

accounts

 

4,911,497

 

 

4,382,668

 

Inventories

 

25,127

 

 

29,146

 

Prepaid expenses and deposits

 

943,263

 

 

1,636,349

 

 

Non-current assets

 

7,981,603

 

 

7,669,941

 

Restricted cash

 

181,011

 

 

185,655

 

Property and equipment

 

872,716

 

 

1,066,194

 

Right-of-use assets

 

375,684

 

 

596,063

 

Intangible assets

 

6,971,910

 

 

8,066,733

 

Goodwill

 

11,977,169

 

 

12,090,609

 

Total assets

$

28,360,093

 

$

29,675,195

 

Liabilities

 

 

Current liabilities

 

 

Trade and other payables and accrued liabilities

$

6,320,976

 

$

6,269,023

 

Income tax payable

 

61,136

 

 

59,044

 

Share-based payment liability

 

28,000

 

 

25,246

 

Derivative warrant liability

 

133,284

 

 

188,042

 

Current portion of long-term debt *

 

13,929,946

 

 

19,812

 

Current portion of lease obligations

 

419,522

 

 

483,362

 

Current portion of contract liabilities

 

1,799,684

 

 

1,809,003

 

Non-current liabilities

 

22,692,548

 

 

8,853,532

 

Long-term debt *

 

–

 

 

13,246,176

 

Long-term lease obligations

 

51,004

 

 

220,750

 

Other long-term liabilities

 

1,091,098

 

 

1,179,639

 

Total liabilities

 

23,834,650

 

 

23,500,097

 

Shareholders' Equity

 

 

Capital stock

 

77,473,589

 

 

76,230,158

 

Contributed surplus

 

8,985,869

 

 

8,671,879

 

Accumulated other comprehensive loss

 

(1,465,895

)

 

(670,788

)

Deficit

 

(80,468,120

)

 

(78,056,151

)

Total shareholders’ equity

 

4,525,443

 

 

6,175,098

 

Total liabilities and shareholders’ equity

$

28,360,093

 

$

29,675,195

 

* The Company obtained a waiver on July 25, 2024 from Beedie for the non compliance of the Maximum Total Secured Debt Leverage financial covenant for the month of June 2024. As a result, the principal amount of Note Payable and paid in kind interest owing remains due to be repaid in January 2027

 

VIQ Solutions Inc. Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Expressed in US dollars, unaudited)

 

Three months ended June 30,

Six months ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue

$

11,575,614

 

$

10,518,893

 

$

21,497,287

 

$

20,571,464

 

Cost of sales

 

6,312,797

 

 

5,884,012

 

 

11,841,912

 

 

11,508,626

 

Gross profit

 

5,262,817

 

 

4,634,881

 

 

9,655,375

 

 

9,062,838

 

 

 

 

Expenses

 

 

 

Selling and administrative expenses

 

4,328,687

 

 

5,405,644

 

 

8,639,461

 

 

10,766,945

 

Research and development expenses

 

155,416

 

 

189,156

 

 

320,526

 

 

333,965

 

Stock-based compensation

 

111,283

 

 

504,835

 

 

139,816

 

 

838,127

 

Gain on revaluation of RSUs

 

(18,534

)

 

(63,042

)

 

(47,311

)

 

(119,988

)

Loss (gain) on revaluation of the derivative warrant liability

 

7,479

 

 

(24,238

)

 

(49,686

)

 

134,514

 

Foreign exchange (gain) loss

 

(590,719

)

 

409,270

 

 

(487,886

)

 

646,288

 

Depreciation

 

194,237

 

 

183,396

 

 

389,221

 

 

409,555

 

Amortization

 

813,889

 

 

1,305,671

 

 

1,620,346

 

 

2,435,974

 

Interest expense

 

405,965

 

 

319,256

 

 

794,889

 

 

653,092

 

Accretion and other financing costs

 

425,216

 

 

240,570

 

 

752,094

 

 

404,286

 

Gain on contingent consideration

 

–

 

 

–

 

 

–

 

 

(10,389

)

Impairment of goodwill and intangible assets

 

–

 

 

–

 

 

–

 

 

157,464

 

Restructuring costs (recovery)

 

5,874

 

 

29,454

 

 

(3,820

)

 

56,866

 

Other income

 

(10,208

)

 

(4,313

)

 

(21,413

)

 

(9,407

)

Total expenses

 

5,828,585

 

 

8,495,659

 

 

12,046,237

 

 

16,697,292

 

 

 

 

Current income tax expense (recovery)

 

6,063

 

 

(47,453

)

 

21,107

 

 

(40,091

)

Deferred income tax recovery

 

–

 

 

(255,162

)

 

–

 

 

(576,519

)

Income tax expense (recovery)

 

6,063

 

 

(302,615

)

 

21,107

 

 

(616,610

)

Net loss for the period

$

(571,831

)

$

(3,558,163

)

$

(2,411,969

)

$

(7,017,844

)

Exchange loss (gain) on translation of foreign operations

 

(483,076

)

 

405,841

 

 

(795,107

)

 

418,189

 

Comprehensive loss for the period

$

(1,054,907

)

$

(3,152,322

)

$

(3,207,076

)

$

(6,599,655

)

 

 

 

Net loss per share

 

 

 

Basic

 

(0.01

)

 

(0.10

)

 

(0.05

)

 

(0.20

)

Diluted

 

(0.01

)

 

(0.10

)

 

(0.05

)

 

(0.20

)

Weighted average number of common shares outstanding – basic

 

51,348,578

 

 

34,804,004

 

 

48,065,488

 

 

34,693,176

 

Weighted average number of common shares outstanding – diluted

 

51,348,578

 

 

34,804,004

 

 

48,065,488

 

 

34,693,176

 

 

 

 

 

 

 

The following is a reconciliation of Net Loss to Adjusted EBITDA, the most directly comparable IFRS measure for the three and six months ended June 30, 2024, and 2023:

Three months ended June 30

Six months ended June 30

(Unaudited)

2024

 

2023

 

2024

 

2023

 

Net Loss

(571,831

)

(3,558,163

)

(2,411,969

)

(7,017,844

)

Add:

Depreciation

194,237

 

183,396

 

389,221

 

409,555

 

Amortization

813,889

 

1,305,671

 

1,620,346

 

2,435,974

 

Interest expense

405,965

 

319,256

 

794,889

 

653,092

 

Current income tax (recovery) expense

6,063

 

(47,453

)

21,107

 

(40,091

)

Deferred income tax recovery

–

 

(255,162

)

–

 

(576,519

)

EBITDA

848,323

 

(2,052,455

)

413,594

 

(4,135,833

)

Accretion and other financing costs

425,216

 

240,570

 

752,094

 

404,286

 

Gain on revaluation of RSUs

(18,534

)

(63,042

)

(47,311

)

(119,988

)

Loss (Gain) on revaluation of the derivative warrant liability

7,479

 

(24,238

)

(49,686

)

134,514

 

Impairment of intangible assets

–

 

–

 

–

 

157,464

 

Restructuring costs

5,874

 

29,454

 

(3,820

)

56,866

 

Other expense (income)

(10,208

)

(4,313

)

(21,413

)

(9,407

)

Stock-based compensation

111,283

 

504,835

 

139,816

 

838,127

 

Foreign exchange (gain) loss

(590,719

)

409,270

 

(487,886

)

646,288

 

 

Adjusted EBITDA

778,714

 

(959,919

)

695,388

 

(2,027,683

)

 

Non-IFRS Measures

The Company prepares its financial statements in accordance with IFRS. Non-IFRS measures are provided by management to provide additional insight into our performance and financial condition. VIQ believes 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. Adjusted EBITDA is not a measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to net income (loss) as determined in accordance with IFRS. For a reconciliation of net income (loss) to Adjusted EBITDA please see the Company’s MD&A for the three and six months ended June 30, 2024.

To evaluate the Company’s operating performance as a complement to results provided in accordance with IFRS, 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 impairment of property and equipment, impairment of goodwill and intangibles, other expense (income), foreign exchange (gain) loss, current and deferred income tax expense. We believe that the items excluded from Adjusted EBITDA are not connected to and do not represent the operating performance of the Company.

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, loss on modification or extinguishment of debt, 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.

Trademarks

This press release includes trademarks, such as “NetScribe”, which are protected under applicable intellectual property laws and are the property of VIQ. Solely for convenience, our trademarks referred to in this press 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 that 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/20240812754639/en/

Media Contact: Jacob Manning VIQ Solutions Email: marketing@viqsolutions.com For more information about VIQ, please visit viqsolutions.com.