RE:RE:RE:RE:New Analyst Coverage Dec 21, 2020VIQ Solutions initiated with a Buy at H.C. Wainwright H.C. Wainwright analyst Scott Buck initiated coverage of VIQ Solutions with a Buy rating and $6 price target. The company focuses on serving four key industry verticals which represent a $10B-plus revenue opportunity in the U.S. as demand for digitalization of records, and storage increase, Buck tells investors in a research note.
Read more at:
https://thefly.com/n.php?id=3216333
Here also is the exchange at the meeting after last earnings release
https://ca.movies.yahoo.com/edited-transcript-vqs-v-earnings-160000728.html (see link for other Q and A)
Your next question comes from the line of Scott Buck with H.C. Wainwright. -------------------------------------------------------------------------------- Scott Christian Buck, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [20] -------------------------------------------------------------------------------- When I think about cash use for 2021, following the raise, you have about $17 million on the balance sheet. What do you need for capital projects and just running the business? And I guess what I'm asking is what of that $17 million is actually available for M&A? -------------------------------------------------------------------------------- Sebastien Par, VIQ Solutions Inc. - President, CEO & Director [21] -------------------------------------------------------------------------------- Yes. So that's -- Scott, that's a great question. And I know Alexie will clarify some of that. But overall, if you take a look at the prospectus and what we went through with the high-quality investors that came in. Basically roughly about -- I think it was 1/3 was related to sales and marketing and the ability to scale to the next level. There was 1/3 that was related to taking the R&D road map to an accelerated play. Now that we've proven the base version and the productivity gains, there's a clear, clear realization that we want now to accelerate everything that we've been talking about: precision, the unaudited draft and the leveraging of the content. So we know how to do it. And now that will be accelerated on the back of that. And there is basically a significant component of that bought deal that was basically set aside for some of the strategic LOIs that we have in place now with some of our target acquisitions. So Alexie, over to you for some clarification. -------------------------------------------------------------------------------- Alexie Edwards, VIQ Solutions Inc. - CFO [22] -------------------------------------------------------------------------------- Yes. You nailed it, Seb. And great question, Scott. And as Seb mentioned, we have identified in our prospectus, the use of funds for this raise. And as Seb said, a portion of it is going to go to invest in our sales infrastructure and to fund the development of service offerings by advancing our R&D, accelerating our R&D, so we can maintain competitiveness and be the lead in the space. And thirdly, the most of the funds will be used to fund potential future acquisitions. And these acquisitions that we deem to be accretive and we have a very disciplined approach as to the way we approach acquisitions, and we will continue on that path. -------------------------------------------------------------------------------- Scott Christian Buck, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [23] -------------------------------------------------------------------------------- Great guys, that's very helpful. Second one, I'm curious, when you have conversations -- when your sales team has conversations with potential customers around budgets for 2021. Are the conversations meaningfully different than what they were a year ago given COVID? I mean are there additional restrictions that are in place or additional challenges when you go to sell the business to potentially new customers? -------------------------------------------------------------------------------- Sebastien Par, VIQ Solutions Inc. - President, CEO & Director [24] -------------------------------------------------------------------------------- Scott, that's outstanding. We're all basically acknowledging, like this is what we do all day long is so there's a couple of data points that I think we need to come up with is I'm going to allow Susan to give you more colors. But that first draft, those 3: precision, onto diversion and making use of the content that we delivered to a next level. All of this is in the context. They are under tremendous amount of pressure to maintain the accuracy, but to basically cut down the turnaround time, and that is starting to have an implication across the entire organization because out of COVID-19 lockdowns, everybody is into a hybrid environment. So we're no longer talking about just evidence data in the form of an audio and video recording between an adjuster or a claim on an insurance or an interrogation room in the claim of insurance, we're now looking at Board meetings. We're now looking at operational meetings. We're now looking at governments proceedings taking place and that documentation in a post-COVID economy basically takes a whole other level of meaning on that. And we're starting to see that being reflected in every single discussion we're having with our customers, whether or not it's an existing customers looking to expand their existing volumes with us, or adding a more modern way to capture the audio and video or in some cases, the RFP. Susan, over to you on that one. -------------------------------------------------------------------------------- Susan Sumner, VIQ Solutions Inc. - COO [25] -------------------------------------------------------------------------------- I would say the answer is absolutely, and it varies by sector. If you look at our media business, it's had no impact at all. Those discussions and conversations are absolutely consistent with what they were pre- and post-COVID, that business is much more influenced by the political environment in the United States right now. And the expansion of the footprint because of the new administration also expands that business model. The courts have absolutely been impacted. In second quarter and third quarter, it wasn't -- it was just everything was shut down. It wasn't that we were having different discussions with them. We weren't having any discussions with them. Now we're seeing an acceleration because people want to, if they had bids on the table. They want to use that money before budgets change in 2021, but they recognize that allocating budget toward a more flexible model that will represent the way the courts will behave in the post-COVID environment is stuff that they have to invest in. If you look at insurance, I don't think it's really changed very much. I would say, on the law enforcement side, we are seeing a lack of clarity around where the budgets will be. We feel that we are very well positioned because, as you know, outsourcing is always a less expensive option than in-sourcing. So as they look at headcount reductions within the law enforcement agencies, we feel that we're very well positioned to be able to pick up that work. And by the way, those people, we have a very good outsourced model, where we will actually pick up legacy employees, train them on how to become seasoned editors and allow that to be a bridge for the law enforcement agencies to cross so that they don't feel so exposed when they're moving headcount reductions into their budgets for 2021 and 2022. -------------------------------------------------------------------------------- Operator [26] ---------------