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VIQ Solutions Announces Second Quarter 2023 Financial Results

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PHOENIX, Ariz.–(BUSINESS WIRE)–VIQ Solutions Inc. (“VIQ” or the “Company”) (TSX and Nasdaq: 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 second quarter ending June 30, 2023. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”).

“Revenue for the second quarter ending June 30, 2023, grew by 5% sequentially from the previous quarter despite some delays in ramping up of new contracts. When normalized to consider the 50% reduction of the Queensland contract from a year ago and negative foreign exchange impact due to the declining Australian dollar and British pound sterling relative to the US dollar, revenues for the quarter would have increased by up by 3.6% year over year. We are happy to report that our clients appear to be back on track to process evidentiary documentation to pre-COVID volumes after a difficult couple of years in 2021 and 2022 due to the pandemic and labor shortages.

“The Company’s strong bookings, client renewals, current client volume trends combined with previously announced restructuring and the ongoing platform migrations in our Australian business are expected to yield gains in gross margins to support a path to positive adjusted EBITDA in the second half of 2023,” said Sebastien Paré, VIQ’s Chief Executive Officer.

Second Quarter 2023 Operational Highlights

  • As of June 30, 2023, a record was set for net new organic bookings of $8.9 million 1 in the last twelve months.
  • Delays in ramp-ups of new customers combined with capacity challenges that created delivery backlogs in our first quarter and first part of our second quarter of 2023 have been resolved.
  • Volumes across every region and every vertical, volumes in June and July have now normalized enabling the Company to resume scalability.
  • Two patent applications were submitted, which will augment our speech engine agnostic workflows, improving documentation accuracy and usability of documentation.
  • First insurance agency with VIQ’s AI-powered FirstDraft™ technology in lieu of traditional transcription is now operational.
  • A new partnership with JAVS that is expected to drive the expansion of VIQ’s technology into courtrooms, providing automated draft transcripts of courtroom proceedings.
  • 2023 Fortress Cyber Security winner in the Data Protection category validates the Company’s commitment to data security.

“After a three-month trial, one of the largest US insurance companies made the decision to not only pivot to utilizing our FirstDraft technology to support their recorded statements, but they also committed to sole source this contract to VIQ,” said Susan Sumner, VIQ’s President and Chief Operating Officer. “Every day we see validation that the technology we have built is producing a highly usable document for consumption by commercial clients or to improve the productivity of our internal ProEdit solution. The value of our workflow solution, NetScribe™ is proven by our latest cost reductions which are a result of the consolidation of resources tied to this fantastic platform.”

Second Quarter 2023 Financial Highlights

  • Revenue of $10.5 million, a decrease of $1.8 million, or 15%, compared to the same period of the prior year, was primarily due to the expected change in the Queensland contract. For the three months ended June 30, 2023, revenue was also negatively impacted by approximately $0.5 million due to the weakening Australian dollar and British pound sterling in comparison to the US Dollar. Excluding the Queensland contract change and impact of foreign exchange, the Company would have reported a positive revenue growth of 3.6% versus the three months period ended June 30, 2022.
  • Gross profit was $4.6 million, or 44.1% of revenue, compared to $6 million, or 49.3% of revenue during the same period of the prior year. The decrease in gross margin was primarily due to the expected reduction in the high margin Queensland contract. Additionally, for the three months ended June 30, 2023, revenue was negatively impacted by approximately $0.5 million due to the weakening Australia dollar and British pound sterling in comparison to the US dollar. Excluding the Queensland contract change and impact of foreign exchange, the Company would have reported a positive current quarter over prior year quarter gross margin growth of 0.7%
  • Net loss of $3.6 million, or $0.10 per diluted share, versus net loss of $3.2 million, or $0.11 per diluted share in the same prior year period.
  • Adjusted EBITDA1 deficit of $0.9 million, versus Adjusted EBITDA deficit of $0.7 million in the same period in the prior year. The increase in Adjusted EBITDA deficit was primarily due to the decreased gross profit, as a result of the expected change in the Queensland 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, more data driven company, with plans to optimize our workforce and restructure certain positions to improve our operating performance and Adjusted EBITDA,” said Alexie Edwards, VIQ’s Chief Financial Officer. “In July 2023 we drew $1 million from our debt facility which will be utilized to fund the optimization of our workforce and for working capital. We also completed a $1.8 million private placement offering to fund domain specific AI models, product development and general working capital purposes to catalyze the next stage of growth.”

VIQ also announces today that Christine Fellowes has resigned from the board of directors of the Company effective August 14, 2023. The Company wishes her success and is appreciative of her contributions during her appointment as a director at VIQ.

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, 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

Conference Call Details

VIQ will host a conference call and webcast to discuss its second quarter 2023 financial results on Tuesday, August 15, 2023, at 11:00 a.m. (Eastern Time). The call will consist of updates by Sebastien Paré, VIQ’s Chief Executive Officer, Sandy Keung, VIQ’s Finance Vice President, 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.

For more information about VIQ, please visit viqsolutions.com.

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