VIQ Solutions Inc. (“VIQ”, “VIQ Solutions” or the “Company”)
(TSX), a global provider of secure, AI-driven, digital voice and
video capture technology and transcription services, today
announces its unaudited financial results for the fourth quarter
and full year ending December 31, 2023. Results are reported in US
dollars and prepared in accordance with International Financial
Reporting Standards (“IFRS”).
“We are encouraged by our fourth quarter of 2023 results and the
start to fiscal 2024 as the post pandemic industry headwinds that
lingered until end of the third quarter of 2023 are abating.
Revenue increased marginally during the fourth quarter of 2023
compared to the previous year after normalizing for the previously
disclosed changes to the DJAG contract in Australia. We also
retained a solid level of net new bookings during the quarter, and
improved productivity in all regions while implementing
comprehensive cost-cutting measures throughout the Company. These
initiatives have not only strengthened our operational efficiency
but also resulted in $2.8M of annualized cost savings going
forward. Achieving these results, while remaining firmly committed
to preserving our client experience and the critical migrations to
our technology platform, required a well-orchestrated plan at a
time when our customers are modernizing and digitizing their
workflows and empowering their stakeholders to deliver and access
the best transcripts possible,” said Sebastien Pare, VIQ’s Chief
Executive Officer.
Mr. Pare added, “following the success of the migrations in
other regions throughout 2023, the technology migrations in
Australia are almost complete. We believe 2024 will show improved
financial performance from these actions as the Company remains
focused on further cost reductions, improving gross margins, and
returning to positive EBITDA.”
Fourth Quarter 2023 Operational Highlights
- Continued migrations of Australian court customers to NetScribe
in Q4, which improved gross margin in the quarter.
- Gains seen in the insurance vertical with a new US client that
ranks in the Top 5. The trend in higher volumes is expected to
continue.
- Client adoption and utilization of FirstDraft are
increasing.
- Gross margin in Australia improved during the fourth quarter of
2023 as we have addressed capacity and training costs that reduced
margins in the third quarter of 2023. Current migration efforts in
Australia may temporarily impact gross margin while adoption
accelerates. Overall productivity trends remain favorable to drive
further margin improvements in 2024.
- Early success from initial AU migrations shows a material
improvement in gross margin percentage in the region.
- Australia’s market demand remains strong reflected by improving
volumes.
- Q4 Bookings1 remain strong at $1 million, demonstrating
continued demand despite capacity challenges.
- As a result of our Domain Specific Language Models (DSLM’s), we
anticipate an increase in SaaS revenue driven by high “usability
and accuracy” of the drafts we are delivering to customers.
“Exiting 2023, we delivered the directional results that we have
waited two years to see. US insurance and criminal justice are
trending upward and returning to pre-COVID levels in early 2024.
Growth in US insurance for SaaS, translation and traditional pro
edit solutions are examples of how we expect other sectors to
evolve through 2024. Our Migration in Australia to our Netscribe
technology is being embraced by our transcribers and is resulting
in productivity gains, demonstrating that this is the right
solution at the right time. The court and legal readiness
initiatives we invested in throughout 2022 and 2023 provides a
commercial offering in those sectors that will globally reposition
this Company to disrupt how documentation is created,” said Susan
Sumner, VIQ’s President and Chief Operating Officer.
Fourth Quarter 2023 Financial Highlights
- Revenue of $10.3 million, an increase of $0.2 million, or 1.7%,
from the same period in the prior year. Excluding the DJAG contract
change and impact of foreign currency exchange, the Company would
have reported revenue growth over the same period in the prior year
of 3%.
- Gross profit of $4.7 million, which was similar to the same
period in the prior year.
- Net loss of $2.9 million, an increase of $0.8 million, from the
same period in the prior year.
- Adjusted EBITDA1 of negative $0.7 million, an improvement of
$0.5 million, or 45%, from the same period in the prior year.
Full Year 2023 Financial Highlights
- Revenue of $41 million, a decrease of $4.8 million, or 11%,
from the same period in the prior year. Excluding the DJAG contract
change and impact of foreign currency exchange, the Company would
have reported revenue growth over the same period in the prior year
of 2%.
- Gross profit of $18.1 million, a decrease of $3.8 million, or
17%, from the same period in the prior year. The decrease in gross
margin was primarily due to the DJAG contract change, which had a
reduction in volume from the high-margin DJAG contract that ended
in 2022.
- Net loss of $14.3 million, an increase of $5.6 million, or 65%,
for the same period in the prior year.
- Adjusted EBITDA1 was negative $4 million, an increase of $0.6
million, or 18% from the same period in the prior year. The
increase in Adjusted EBITDA deficit was primarily due to the
decreased gross margin reported above, as a result of the expected
change in the DJAG contract, and the negative impact of foreign
exchange, partially offset by decreased selling and administrative
expenses.
“We continue to align our global resources to evolve into a
leaner company to improve our operating performance and Adjusted
EBITDA,” said Alexie Edwards, VIQ’s Chief Financial Officer.
Improving VIQ’s EBITDA performance continues to be a top priority
and we have implemented a series of measures aimed at improving
EBITDA performance, including further cost reductions. We are also
proud that we completed a $1.2M oversubscribed private placement in
February 2024 for working capital and general corporate purposes,”
said Alexie Edwards, VIQ’s Chief Financial Officer.
1 Represents a non-IFRS measure. These 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 and Bookings, 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 audited financial statements and
accompanying MD&A for the year ended December 31, 2023 and 2022
(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 March 28, 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
1-888-500-3691 (North America toll-free) or +1-646-307-1951
(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 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.
Consolidated Statements of Financial
Position
(Expressed in USD dollars,
unaudited)
December 31,
2023
December 31,
2022
Assets
Current assets
Cash
$
1,621,778
$
1,657,571
Trade and other receivables, net of
allowance for doubtful accounts
4,382,668
5,305,728
Income tax recoverable
–
104,670
Inventories
29,146
37,807
Prepaid expenses and deposits
1,636,349
2,050,661
Non-current assets
7,669,941
9,156,437
Restricted cash
185,655
463,743
Property and equipment
1,066,194
1,432,133
Right-of-use assets
596,063
1,058,600
Intangible assets
8,066,733
10,731,917
Goodwill
12,090,609
12,047,048
Deferred tax assets
–
655,004
Total assets
$
29,675,195
$
35,544,882
Liabilities
Current liabilities
Trade and other payables and accrued
liabilities
$
6,269,023
$
5,937,880
Income tax payable
59,044
45,212
Share-based payment liability
25,246
31,487
Derivative warrant liability
188,042
290,712
Current portion of long-term debt
19,812
8,634,258
Current portion of lease obligations
483,362
487,673
Current portion of contract
liabilities
1,809,003
1,745,415
Non-current liabilities
8,853,532
17,172,637
Deferred tax liability
–
868,643
Long-term debt
13,246,176
19,812
Long-term lease obligations
220,750
718,575
Other long-term liabilities
1,179,639
1,121,805
Total liabilities
23,500,097
19,901,472
Shareholders' Equity
Capital stock
76,230,158
74,690,527
Contributed surplus
8,671,879
5,892,192
Accumulated other comprehensive loss
(670,788
)
(1,214,354
)
Deficit
(78,056,151
)
(63,724,955
)
6,175,098
15,643,410
Total liabilities and shareholders'
equity
$
29,675,195
$
35,544,882
VIQ Solutions Inc.
Consolidated Statements of Loss and
Comprehensive Loss
(Expressed in USD dollars,
unaudited)
Year ended December 31
2023
2022
Revenue
$
41,024,024
$
45,843,929
Cost of Sales
22,911,952
23,918,226
Gross Profit
18,112,072
21,925,703
Expenses
Selling and administrative expenses
21,738,200
24,526,303
Research and development expenses
679,589
734,115
Stock based compensation
955,571
2,779,312
Gain on revaluation of options
–
(1,511,399
)
Gain on revaluation of RSUs
(197,711
)
(550,260
)
Gain on revaluation of the derivative
warrant liability
(383,428
)
(4,255,017
)
Foreign exchange loss (gain)
566,530
(452,068
)
Depreciation
795,104
579,249
Amortization
4,553,255
5,508,954
Interest expense
1,358,579
1,052,618
Accretion and other financing costs
1,472,400
1,231,194
Loss (Gain) on contingent
consideration
(10,389
)
80,071
Impairment of goodwill and intangibles
157,464
–
Impairment of property and equipment
–
15,246
Loss on extinguishment of debt
–
747,865
Loss on modification of debt
549,646
–
Restructuring costs
403,870
323,075
Business acquisition costs
–
433,372
Other income
(26,248
)
(1,291
)
Total expenses
32,612,432
31,241,339
Current income tax (recovery) expense
33,596
(105,256
)
Deferred income tax recovery
(202,760
)
(504,365
)
Income tax recovery
(169,164
)
(609,621
)
Net loss for the year
$
(14,331,196
)
$
(8,706,015
)
Exchange gain on translating foreign
operations
543,566
(1,288,880
)
Comprehensive loss for the year
$
(13,787,630
)
$
(9,994,895
)
Net loss per share
Basic
(0.38
)
(0.28
)
Diluted
(0.38
)
(0.28
)
Weighted average number of common shares
outstanding - basic
37,289,689
31,648,001
Weighted average number of common shares
outstanding - diluted
37,289,689
31,648,001
The following is a reconciliation of Net Loss to Adjusted
EBITDA, the most directly comparable IFRS measure for the three
months and year ended December 31, 2023, and 2022:
Three months ended December
31
Year ended December 31
(Unaudited)
2023
2022
2023
2022
Net Loss
(2,934,336)
(2,168,022)
(14,331,196)
(8,706,015)
Add:
Depreciation
175,794
146,766
795,104
579,249
Amortization
1,075,210
2,289,819
4,553,255
5,508,954
Interest expense
361,605
236,885
1,358,579
1,052,618
Current income tax (recovery) expense
65,697
(180,071)
33,596
(105,256)
Deferred income tax recovery
(340,984)
(319,284)
(202,760)
(504,365)
EBITDA
(1,597,014)
6,093
(7,793,422)
(2,174,815)
Accretion and other financing costs
325,181
475,598
1,472,400
1,231,194
Loss on extinguishment of debt
-
-
-
747,865
Loss on modification of debt
549,646
-
549,646
-
Gain on revaluation of options
-
(447,737)
-
(1,511,399)
Gain on revaluation of RSUs
(27,620)
(104,578)
(197,711)
(550,260)
Loss (Gain) on revaluation of the
derivative warrant liability
25,172
(730,491)
(383,428)
(4,255,017)
Impairment of property and equipment
-
15,246
-
15,246
Impairment of intangible assets
-
-
157,464
-
Restructuring Costs
(127,593)
19,385
403,870
323,075
Business acquisition costs
-
14,516
-
433,372
Other Expense (Income)
257,665
(392)
236,227
(1,291)
Stock-based compensation
62,470
605,343
955,571
2,779,312
Foreign exchange (gain) loss
(123,045)
(1,049,277)
566,530
(452,068)
Adjusted EBITDA
(655,138)
(1,196,294)
(4,032,853)
(3,414,786)
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 and Bookings are not measures
recognized by IFRS and do not have standardized meanings prescribed
by IFRS. Therefore, Adjusted EBITDA and Bookings 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.
We calculate “Bookings” for a given period as the estimated
contract value (for services tied to volume) 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, software licenses, subscriptions, SaaS, and hardware
during the period.
Recurring client contracts are any contracts entered into on a
multi-year or month-to-month basis, excluding any professional
services contracts for consulting, advisory, or project-based work,
software licenses, and hardware.
We use Bookings to measure 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. Bookings are also used by management as a factor
in determining performance-based compensation for our sales force.
While we believe Bookings, in combination with other metrics, are
an indicator of our near-term future revenue opportunity, it is not
intended to be used as a projection of future revenue. Booking
information is a non-IFRS measure, that involves judgments,
estimates, and assumptions, which does not have a standard industry
definition. Our calculation of Bookings may differ from similarly
titled metrics presented by other companies.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240327945490/en/
For additional information:
Media: Jacob Manning VIQ Solutions Email:
marketing@viqsolutions.com
For more information about VIQ, please visit
viqsolutions.com.
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