Quisitive Technology Solutions Inc V.QUIS

RE:Other Analyst Coverage

[savyinvestor333]

Scotia Report $2.00 Target


QUIS Q3/22 First Take: Looks Promising

OUR TAKE: Positive. Quisitive reported Q3/22 earnings post-market close. The company recorded a strong quarter with robust growth across both Global Cloud Solutions and Global Payments Solutions business streams primarily driven by y/y organic growth alongside its strategic acquisitions.

On a y/y basis, the company reported total revenues of ~$49 million for Q3/22 (y/y growth of ~76%), resulting in gross profit of ~$20 million (y/y growth of ~87%) at a gross profit margin of ~42%. Adjusted EBITDA was reported at ~$8 million for Q3/22 (y/y growth of ~47%) or adjusted EBITDA margin of ~16%. Overall, the quarter’s results were ahead of our estimates on revenues, cross profit, and EBITDA (by ~9%, ~16% and ~18%, respectively) and beat Street estimates on all three measures (by ~5%, ~6% and ~13, respectively).

The Global Cloud Solutions segment reported revenue of ~$36 million (y/y growth of ~107%) and the Global Payments Solutions segment reported ~$13 million (y/y growth of ~23%).

Key Highlights for the Quarter

• Management attributed record results to an outsized contribution from the Azure-supported Cloud Solutions segment, synergies of cross-selling under one Quisitive brand, strengthening the renewal rate with existing customers, and increasing market share.

• On the Payment Solutions front, the company reported growth in charge volumes within the Merchant Services Group. LedgerPay, the cloud-enabled payments solutions platform, was recently rebranded to PayiQ.

• Update on LedgerPay/PayiQ:
  • Management reported steady progress on the PayiQ platform toward full commercialization.
  • The company is now certified to have both Mastercard and Visa operating in its cloud production environments and in parallel continues to advance the American Express and Discover certifications.
  • The PayiQ platform has successfully completed live transactions using the Mastercard network for authorization.
  • Recently partnered with Cybersource, a Visa Solution, to directly access VisaNet and expand the payment acceptance model for PayiQ.
  • Amended existing credit facility provides a new US$9.5 million non-revolving, five-year term loan. The proceeds from the loan are expected to be used to fund earn-out obligations on previously completed acquisitions and for general corporate purposes. The total senior debt to EBITDA ratio was reported at 2.92x, as of September 30, 2022.

Overall, at first glance Q3 looks like a solid quarter whereby the company was able to solidify its Cloud business and report good progress on the Payments Solutions business stream. We will look to provide additional details after a thorough analysis of the financial statements and discussion with the management.