VIQ Solutions Announces Third Quarter 2023 Financial Results

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PHOENIX, Ariz. — VIQ Options Inc. (“VIQ” or the “Firm”) (TSX:VQS), a world supplier of safe, AI-driven, digital voice and video seize know-how and transcription providers, at the moment proclaims its unaudited monetary outcomes for the third quarter ending September 30, 2023. Outcomes are reported in US {dollars} and ready in accordance with Worldwide Monetary Reporting Requirements (“IFRS”).

“The third quarter represents the final comparable quarter towards the prior Queensland Courts Division of Justice and Lawyer Common (“DJAG”) contracts which created challenges in comparative metrics all through 2023. The business labor shortages that affected the quarter, notably in Australia, are being managed however created important challenges within the quarter for each acceleration of income and abatements that impacted our backside line. These challenges are actually largely underneath management and the implementation of the NetScribe aiAssist platform is predicted to scale back the labor danger within the coming years. Excluding the DJAG contract and the influence of overseas alternate, VIQ would have reported optimistic year-to-date income progress of 1.2% over the comparative interval in 2022,” stated VIQ CEO Sebastien Pare.

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Mr. Pare continued, “Demand is excessive for our AI-enabled transcription and translation applied sciences to transform complicated multi-speaker occasions, reminiscent of courtroom hearings, police interviews, and depositions into formatted and usable content material. That is confirmed by the backlog that represented roughly 45 days of regulation enforcement work. Whereas sure challenges have restricted our potential to completely acknowledge this backlog, our bookings stay sturdy, and proof of restoration underscores the resilience within the business and of VIQ.”

The migration of Courts and Regulation Enforcement prospects in Australia is underway with completion anticipated in Q1 of 2024. That is anticipated to enhance efficiencies throughout the group and end in a rise in margins. These efficiencies, together with the price reductions related to delisting from NASDAQ and the continuing operational optimization going down, will additional enhance our future working efficiency and Adjusted EBITDA.

Mr. Pare continued, “Investments in know-how have resulted in a positive pivot to a better proportion of bookings and pipeline in our Software program as a service (“SaaS”) and Platform as a service options. As these bookings start recurring billing, this can even favorably influence the margins related to our booked progress.”

“Whereas the financial circumstances leading to labor shortages have actually slowed our cadence, VIQ is targeted on utilizing know-how, VIQ’s technique of NetScribe AI-enabled platform to allow our segments, together with VIQ, resolve the backlog and velocity the doc creation course of. This reduces danger in the long run and accelerates our migrations to AI-enabled options we’re bringing to market,” stated Susan Sumner, VIQ’s President and Chief Working Officer.

Highlights from the quarter are as follows:

Third Quarter 2023 Operational Highlights

• Income and margins decreased in Q3 primarily as a result of beforehand introduced contract adjustments to Queensland DJAG.
• Commenced migrations of Australian courtroom prospects to NetScribe in Q3, which is predicted to enhance gross margins in 2024.
• Beneficial properties seen within the insurance coverage vertical with new US shopper that ranks within the High 5.
• Shopper transition to AI-only drafts helps to unravel capability challenges.
• Capability restoration and enlargement led to progress in income and margins within the U.S. authorized and felony justice verticals versus the prior yr third quarter.
• Australia’s market demand stays sturdy whereas it additionally continues to be impacted by capability challenges.
• Gross margin reductions in Australia are anticipated to be momentary as a consequence of aggressive capability onboarding and coaching prices.
• Q3 Bookings¹ stay sturdy at $932K, demonstrating continued demand regardless of capability challenges.
• Early success from preliminary AU migrations exhibits a 50% enchancment in gross margin proportion.
• Enhance in AI-only SaaS gross sales being pushed by domain-specific skilled AI fashions.

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Third Quarter 2023 Monetary Highlights

• Income of $10.1 million, a lower of $1.7 million, or 14%, in comparison with the identical interval of the prior yr, was primarily as a result of anticipated change within the DJAG contract and the weakening Australian greenback and British pound sterling. For the three months ended September 30, 2023, income was negatively impacted by roughly $0.3 million as a result of weakening Australian greenback compared to the US greenback. Excluding the DJAG contract change and the influence of overseas alternate, the Firm would have reported optimistic year-to-date income progress over a comparative interval in 2022 of 1.2%.
• Gross revenue was $4.3 million, or 42.9% of income, in comparison with $5.6 million, or 47.3% of income throughout the identical interval of the prior yr. The lower in gross margin was primarily as a result of anticipated discount in volumes from the high-margin DJAG contract that led to 2022. Moreover, for the three months ended September 30, 2023, the gross margin was negatively impacted by roughly $0.1 million as a result of weakening Australian greenback and British pound sterling compared to the US greenback. Excluding the DJAG contract change and the influence of overseas alternate, the Firm would have reported the identical gross margin proportion because the prior-year quarter.
• Internet lack of $4.4 million, or $0.11 per diluted share, versus a internet lack of $1.3 million, or $0.04 per diluted share in the identical prior yr interval.
• Adjusted EBITDA¹ deficit of $1.4 million, versus Adjusted EBITDA deficit of $0.6 million in the identical prior interval. The rise in Adjusted EBITDA deficit was primarily as a result of decreased gross margin reported above, because of the anticipated change within the DJAG contract, and the unfavourable influence of overseas alternate, partially offset by decreased promoting and administrative bills.

“Bettering VIQ’s EBITDA efficiency is a high precedence. We launched a restructuring plan earlier this yr concentrating on a discount of promoting and administrative bills of between $2 million to $2.5 million over the following 12 months. We’re additionally implementing a sequence of measures geared toward bettering EBITDA efficiency, together with improved margin attainment from volumes being migrated on NetScribe and domain-specific skilled AI fashions and continued offshoring,” stated Alexie Edwards, VIQ’s Chief Monetary Officer.

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A replica of the Firm’s Interim Condensed Monetary Statements and accompanying MD&A for the three and 9 months ended September 30, 2023 and 2022 (unaudited) will likely be out there underneath the Firm’s profile on SEDAR+ at www.sedarplus.ca.

Convention Name Particulars

VIQ will host a convention name and webcast to debate its third quarter 2023 monetary outcomes on November 13, 2023, at 11:00 a.m. (Jap Time). The decision will include updates by Sebastien Paré, VIQ’s Chief Government Officer, Alexie Edwards, VIQ’s Chief Monetary Officer, and Susan Sumner, VIQ’s President and Chief Working Officer, adopted by a question-and-answer interval.

Traders could entry a stay webcast of the decision on the Firm’s web site at www.viqsolutions.com/buyers or by dialing 1-888-440-4052 (North America toll-free) or +1-646-960-0827 (worldwide) to be related to the decision by an operator utilizing convention ID quantity 4983233. Contributors ought to dial in no less than 10 minutes previous to the beginning of the decision.

A replay of the webcast will likely be out there on the Firm’s web site by the identical hyperlink roughly one hour after the convention name concludes.

For extra details about VIQ, please go to viqsolutions.com.

About VIQ Options

VIQ Options is a world supplier of safe, AI-driven, digital voice and video seize know-how and transcription providers. VIQ provides a seamless, complete resolution suite that delivers clever automation, enhanced with human evaluate, to drive transformation in the way in which content material is captured, secured, and repurposed into actionable info. The cyber-secure, AI know-how and providers platform are carried out in probably the most inflexible safety environments together with felony justice, authorized, insurance coverage, authorities, company finance, media, and transcription service supplier markets, enabling them to enhance the standard and accessibility of proof, to simply establish predictive insights and to realize digital transformation sooner and at a decrease value.

Ahead-looking Statements

Sure statements included on this press launch represent forward-looking statements or forward-looking info (collectively, “forward-looking statements”) underneath relevant securities laws. Such forward-looking statements or info are offered for the aim of offering details about administration’s present expectations and plans regarding the longer term. Readers are cautioned that reliance on such info is probably not acceptable for different functions.

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Ahead-looking statements (sometimes include statements with phrases reminiscent of “anticipate”, “imagine”, “count on”, “plan”, “intend”, “estimate”, “suggest”, “undertaking” or related phrases, together with negatives thereof, suggesting future outcomes or that sure occasions or circumstances “could” or “will” happen). These statements are solely predictions. Ahead-looking statements on this press launch embrace however should not restricted to statements with respect to the submitting of the monetary statements and associated MD&A on SEDAR+, the advantages of the implementation of the NetScribe aiAssist platform, the migration of Courts and Regulation Enforcement prospects in Australia, margins related to the Firm’s booked progress, the Firm’s priorities and the convention name to debate the Firm’s third quarter 2023 outcomes.

Ahead-looking statements are primarily based on a number of elements and assumptions which have been used to develop such statements, however which can show to be incorrect. Though VIQ believes that the expectations mirrored in such forward-looking statements are cheap, undue reliance shouldn’t be positioned on forward-looking statements as a result of VIQ may give no assurance that such expectations will show to be right. Along with different elements and assumptions which may be recognized on this press launch, assumptions have been made concerning, amongst different issues, latest initiatives, value financial savings from workforce optimization, value reductions from the Firm’s workflow options, and that gross sales and prospects could enhance income]. Readers are cautioned that the foregoing record isn’t exhaustive of all elements and assumptions which were used.

Ahead-looking statements are essentially primarily based on various opinions, assumptions and estimates that whereas thought of cheap by the Firm as of the date of this press launch, are topic to identified and unknown dangers, uncertainties, assumptions, and different elements that will trigger the precise outcomes, degree of exercise, efficiency or achievements to be materially totally different from these expressed or implied by such forward-looking statements, together with however not restricted to the elements described in larger element within the “Threat Elements” part of the Firm’s annual report and within the Firm’s different supplies filed with the Canadian securities regulatory authorities and the U.S. Securities and Change Fee infrequently, out there at www.sedarplus.com and www.sec.gov, respectively.

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These elements should not meant to signify a whole record of the elements that would have an effect on the Firm; nevertheless, these elements ought to be thought of fastidiously. Such estimates and assumptions could show to be incorrect or overstated. The forward-looking statements contained on this press launch are made as of the date of this press launch and the Firm expressly disclaims any obligations to replace or alter such statements, or the elements or assumptions underlying them, whether or not because of new info, future occasions or in any other case, besides as required by regulation.

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VIQ Options Inc.
Reconciliation of Non-IFRS Measures
(Expressed in United States {dollars}) (Unaudited)

The next is a reconciliation of Internet Loss to Adjusted EBITDA, probably the most straight comparable IFRS measure for the three and 9 months ended September 30, 2023, and 2022:

Non-IFRS Measures

The Firm prepares its monetary statements in accordance with IFRS. Non-IFRS measures are offered by administration to supply extra perception into our efficiency and monetary situation. VIQ believes non-IFRS measures are an vital a part of the monetary reporting course of and are helpful in speaking info that enhances and dietary supplements the consolidated monetary statements. Adjusted EBITDA and Bookings should not measures acknowledged by IFRS and do not need standardized meanings prescribed by IFRS. Due to this fact, Adjusted EBITDA and Bookings is probably not akin to related measures introduced by different issuers. Traders are cautioned that Adjusted EBITDA shouldn’t be construed as a substitute for internet earnings (loss) as decided in accordance with IFRS.

To guage the Firm’s working efficiency as a complement to outcomes offered in accordance with IFRS, the time period “Adjusted EBITDA” refers to internet earnings (loss) earlier than adjusting earnings for stock-based compensation, depreciation, amortization, curiosity expense, accretion, and different financing expense, (achieve) loss on revaluation of choices, (achieve) loss on revaluation of restricted share models, achieve (loss) on revaluation of spinoff warrant legal responsibility, restructuring prices, (achieve) loss on revaluation of conversion function legal responsibility, loss on reimbursement of long-term debt, enterprise acquisition prices, impairment of goodwill and intangibles, different expense (earnings), overseas alternate (achieve) loss, present and deferred earnings tax expense. We imagine that the gadgets excluded from Adjusted EBITDA should not related to and don’t signify the working efficiency of the Firm.

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We imagine that Adjusted EBITDA is beneficial supplemental info because it offers a sign of the outcomes generated by the Firm’s predominant enterprise actions previous to making an allowance for how these actions are financed and taxed in addition to bills associated to stock-based compensation, depreciation, amortization, impairment of goodwill and intangibles, different expense (earnings), and overseas alternate (achieve) loss. Accordingly, we imagine that this measure may additionally be helpful to buyers in enhancing their understanding of the Firm’s working efficiency.

We calculate “Bookings” for a given interval because the estimated contract worth (for providers tied to quantity) of our recurring shopper contracts entered into through the interval from (i) new purchasers and (ii) internet upgrades by present purchasers throughout the similar workload, plus the precise (not annualized) estimated worth {of professional} providers consulting, advisory or project-based orders acquired, software program licenses, subscriptions, SaaS, and {hardware} through the interval.

Recurring shopper contracts are any contracts entered into on a multi-year or month-to-month foundation, excluding any skilled providers contracts for consulting, advisory, or project-based work, software program licenses, and {hardware}.

We use Bookings to measure the quantity of latest enterprise generated in a interval, which we imagine is a vital indicator of latest shopper acquisition and our potential to cross-sell new providers to present purchasers. Bookings are additionally utilized by administration as a think about figuring out performance-based compensation for our gross sales drive. Whereas we imagine Bookings, together with different metrics, are an indicator of our near-term future income alternative, it isn’t meant for use as a projection of future income. Reserving info is a non-IFRS measure, that includes judgments, estimates, and assumptions, which doesn’t have a normal business definition. Our calculation of Bookings could differ from equally titled metrics introduced by different corporations.

Emblems

This press launch contains logos, reminiscent of “NetScribe”, that are protected underneath relevant mental property legal guidelines and are the property of VIQ. Solely for comfort, our logos referred to on this press launch could seem with out the ® or TM image, however such references should not meant to point, in any manner, that we’ll not assert our rights to those logos, commerce names, and providers marks to the fullest extent underneath relevant regulation. Emblems which may be used on this press launch, aside from those who belong to VIQ, are the property of their respective homeowners.

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Contacts

Media Contact:
Tim Johnson
VIQ Options
Electronic mail: marketing@viqsolutions.com

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