News Press Releases

VIQ Solutions Report First Quarter 2024 Results

T.VQS | May 13, 2024

Adjusted EBITDA1 improved significantly quarter over quarter

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, today announces its unaudited financial results for the first quarter ending March 31, 2024. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”).

“This quarter’s performance was noteworthy on a number of fronts. Despite the normal seasonality of the Courts segment in January, two of the three months in the quarter generated positive Adjusted EBITDA. Directionally, the Adjusted EBITDA path is the result of the positioning of our technology platform NetScribe aiAssist, the human adoption of industry specific AI, the previously announced cost reductions, price increase adjustments and the launch of some of the larger bookings in our Insurance segment. These drivers have laid the foundation for a continued financial improvement as the year progresses,” said Sebastien Pare, CEO of VIQ Solutions.

First Quarter 2024 Financial Highlights

Revenue of $9.9 million, a decrease of $0.1 million or 1%, from the same period in the prior year. Excluding the impact of foreign currency exchange, the Company would have reported revenue growth of 0.4% over the same period in the prior year.
Gross profit of $4.4 million, which was similar to the same period in the prior year.
Net loss of $1.8 million, a decrease of $1.6 million, from the same period in the prior year.
Adjusted EBITDAof negative $0.1 million, an improvement of $1 million, or 91%, from the same period in the prior year.

“We are pleased with the significant improvement of approximately $1M to Adjusted EBITDA quarter over quarter and excited about our prospects for 2024. We executed and progressed against the strategic initiatives we set in motion at the beginning of 2023, continuing through the first quarter of 2024, which have resulted in significant cost reductions. Improving VIQ’s Adjusted EBITDA performance continues to be a top priority,” said Alexie Edwards, VIQ’s Chief Financial Officer.

First Quarter 2024 Operational Highlights

As of the end of March 2024, 50% of VIQ’s available work in Australia was migrated to the Netscribe aiAssist platform which will drive improved gross margins.
Volume gains seen in the Insurance vertical with a new US client that ranks in the Top 5 U.S. Insurance carriers. The trend in higher volumes is expected to continue.
Implemented price increases have continued to provide a lift to revenues.
Client adoption and utilization of FirstDraft under SaaS contracts is increasing.
Australia’s market demand remains strong, which is reflected by improving volumes.
As a result of our Domain Specific Language Models (DSLM’s), the Company anticipates an increase in SaaS revenue driven by high “usability and accuracy” of the drafts that VIQ is delivering to customers.

“Q1, which is heavily impacted by seasonality in Australia, is typically the lowest revenue generating quarter of the year. Our technology platform migrations in Australia to Netscribe is being embraced not only by our transcribers but also by our customers that are not only adapting to the technology but engaging to accelerate disruption within the courts and legal sectors. Our results in the first quarter, show we are delivering as expected, in particular, we are encouraged by the recovery of our run rate in U.S. verticals such as insurance and criminal justice. We are also excited by the long-awaited implementation of one of the top insurance companies in the U.S. This organic win is a meaningful contract that will help fuel and fortify favorable trends in 2024. Innovations that will be released in the next quarter will top off the requirements to fully execute and solidify our position as both the services and technology lead in all the geographies where we operate”, said Susan Sumner, VIQ's President and Chief Operating Officer.

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 and the reconciliations of the non-IFRS financial measures to their most directly comparable IFRS financial measures in the tables at the end of this press release.

A copy of the Company’s unaudited financial statements and accompanying MD&A for the three months ended March 31, 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 the Financial Information on May 14, 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 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.

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)
	March 31, 2024			December 31, 2023
Assets
Current assets
Cash	$	2,221,509		$	1,621,778
Trade and other receivables, net of allowance for doubtful accounts		4,827,117			4,382,668
Inventories		31,497			29,146
Prepaid expenses and deposits		1,224,121			1,636,349
Non-current assets		8,304,244			7,669,941
Restricted cash		176,778			185,655
Property and equipment		934,252			1,066,194
Right-of-use assets		484,861			596,063
Intangible assets		7,417,504			8,066,733
Goodwill		11,861,876			12,090,609
Total assets	$	29,179,515		$	29,675,195
Liabilities
Current liabilities
Trade and other payables and accrued liabilities	$	6,537,747		$	6,269,023
Income tax payable		72,049			59,044
Share-based payment liability		24,537			25,246
Derivative warrant liability		127,072			188,042
Current portion of long-term debt *		13,811,491			19,812
Current portion of lease obligations		464,135			483,362
Current portion of contract liabilities		1,786,184			1,809,003
Non-current liabilities		22,823,215			8,853,532
Long-term debt *		–			13,246,176
Long-term lease obligations		123,720			220,750
Other long-term liabilities		1,033,879			1,179,639
Total liabilities		23,980,814			23,500,097
Shareholders' Equity
Capital stock		77,403,488			76,230,158
Contributed surplus		8,674,321			8,671,879
Accumulated other comprehensive loss		(982,819	)		(670,788	)
Deficit		(79,896,289	)		(78,056,151	)

		5,198,701			6,175,098
Total liabilities and shareholders' equity	$	29,179,515		$	29,675,195

* The Company obtained a waiver on April 30, 2024 from Beedie for the non compliance of the Maximum Total Secured Debt Leverage financial covenant for the month of March 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 March 31,
		2024			2023
Revenue	$	9,921,673		$	10,052,571
Cost of Sales		5,529,115			5,624,614
Gross Profit		4,392,558			4,427,957
Expenses
Selling and administrative expenses		4,310,774			5,361,301
Research and development expenses		165,110			144,809
Stock based compensation		28,533			333,292
Gain on revaluation of RSUs		(28,777	)		(56,946	)
(Gain) loss on revaluation of the derivative warrant liability		(57,165	)		158,752
Foreign exchange loss		102,833			237,018
Depreciation		194,894			226,159
Amortization		806,457			1,130,303
Interest expense		388,924			333,836
Accretion and other financing costs		326,878			163,716
Gain on contingent consideration		–			(10,389	)
Impairment of property and equipment		–			157,464
Restructuring costs		(9,694	)		27,412
Other income		(11,205	)		(5,094	)
Total expenses		6,217,652			8,201,633
Current income tax expense		15,044			7,362
Deferred income tax recovery		–			(321,357	)
Income tax expense (recovery)		15,044			(313,995	)
Net loss for the period	$	(1,840,138	)	$	(3,459,681	)
Exchange gain (loss) on translating foreign operations		(312,031	)		12,348
Comprehensive loss for the period	$	(2,152,169	)	$	(3,447,333	)
Net loss per share
Basic		(0.04	)		(0.10	)
Diluted		(0.04	)		(0.10	)
Weighted average number of common shares outstanding - basic		44,782,398			34,649,697
Weighted average number of common shares outstanding - diluted		44,782,398			34,649,697

The following is a reconciliation of Net Loss to Adjusted EBITDA, the most directly comparable IFRS measure for the three months ended March 31, 2024, and 2023:

	Three months ended March 31
(Unaudited)	2024	2023
Net Loss	(1,840,138)	(3,459,681)
Add:
Depreciation	194,984	226,159
Amortization	806,457	1,130,303
Interest expense	388,924	333,836
Current income tax expense	15,044	7,362
Deferred income tax recovery	-	(321,357)
EBITDA	(434,729)	(2,083,378)
Accretion and other financing costs	326,878	163,716
Gain on revaluation of RSUs	(28,777)	(56,946)
Loss (Gain) on revaluation of the derivative warrant liability	(57,165)	158,752
Impairment of intangible assets	-	157,464
Restructuring Costs	(9,694)	27,412
Other Income	(11,205)	(5,094)
Stock-based compensation	28,533	333,292
Foreign exchange loss	102,833	237,018

Adjusted EBITDA	(83,326)	(1,067,764)

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 do not have standardized meanings 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.

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, loss on extinguishment of long-term debt, loss on modification of debt, business acquisition costs, 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.