VIQ Solutions Announces Transformative Q3 2024: Significant Growth in Adjusted EBITDA

VIQ Solutions Announces Transformative Q3 2024: Significant Growth in Adjusted EBITDA

Media Contact:
Jacob Manning VIQ Solutions
Email: marketing@viqsolutions.com

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

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, is pleased to announce its unaudited financial results for the third quarter ending September 30, 2024. Results are reported in US dollars and prepared in accordance with International Financial Reporting Standards (“IFRS”).

“Our third-quarter results reflect strong financial performance, driven by revenue growth and improved gross margins. This success is a direct result of our effective court migrations in Australia and significant productivity gains. The enhancements made to our AI-driven Netscribe platform, including the introduction of AI-based formatting tools for court reporters, have streamlined operations and boosted efficiency, leading to substantial cost savings and margin expansion. With key migrations now complete and a strong focus on cost optimization, we have improved operational efficiency, positioning the company for continued gross margin growth and enhanced Adjusted EBITDA in the quarters ahead,” said Sebastien Paré, CEO of VIQ Solutions.

Third Quarter 2024 Operational Highlights

Global Tech-AI Migrations: We have successfully transitioned the majority of our revenue-generating operations to the NetScribe AI Assist platform on a global scale, driving increased gross margins and improved operational efficiency.
Renewals and New Awards: Key renewals and new contract awards with major clients have strengthened our ARR revenue base for the coming years.
Productivity Gains in Australia: Operational improvements in the Australian court sector have enabled a shift from fixed staffing to a variable-cost model that adapts to case volume and court scheduling, enhancing flexibility and cost efficiency.
Increased Client Adoption and Utilization: Client engagement with FirstDraft has grown across all revenue segments, leading to a twofold increase in FirstDraft SaaS revenue year over year for the nine months ending September 30, 2024.
Enhanced AI Platform Performance: Rising volumes processed on our AI Platform have further optimized our proprietary Domain-Specific Language Models (DSLMs) and post-processing, reducing word error rates and improving transcription efficiency, which cuts the time required to transcribe each minute of audio.
Insurance Volume Growth: The Insurance sector continues to experience steady growth, with a notable acceleration in recent months. One major client has boosted its volume by 800% since expanding its contract in April 2024, while another key client’s recent contract expansion has resulted in a 250% increase in volume since July 2024. These significant increases highlight the growing demand for our solutions within the Insurance industry.

“Our third-quarter results demonstrate strong revenue growth and improved gross margins, driven by successful court migrations in Australia and a 30% productivity gain among our transcribers. The enhancements to our AI-driven Netscribe platform have revolutionized document creation by automating complex, state-specific templates, bringing greater consistency and efficiency to court reporting. As demand for court reporting services continues to rise, our technology is proving essential in supporting clients facing resource constraints. With key migrations now completed, we have accelerated cost-reduction initiatives, further enhancing operational efficiency. We are confident that these advancements will continue to drive gross margin expansion and strengthen Adjusted EBITDA in the coming quarters.” said Susan Sumner, COO and President of VIQ Solutions.

Third Quarter 2024 Financial Highlights

Revenue of $11.1 million, an increase of $1 million or 10%, from the same period in the prior year.
Gross profit of $5.1 million, an increase of $0.8 million or 19% from the same period in the prior year.
Net loss of $1.1 million, a decrease of $3.3 million or 75%, from the same period in the prior year.
Adjusted EBITDA¹ of $0.8 million, an improvement of $2.1 million, or 158%, from the same period in the prior year.

“We are thrilled to report a significant improvement of approximately $2.1M to Adjusted EBITDA from the same period last year. This growth reflects the success of our strategic productivity margin initiatives, tight cost management and revenue expansion in an industry experiencing rapid modernization due to the integration of AI technology. We remain focused on executing our strategic priorities and financial targets. Enhancing VIQ’s Adjusted EBITDA performance remains a top priority” said Alexie Edwards, VIQ’s Chief Financial Officer.

¹Represents 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.

A copy of the Company’s unaudited financial statements and accompanying MD&A for the three and nine months ended September 30, 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 Financial Information on Wednesday November 13, 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 at least 10 minutes before the call starts.

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)
	September 30, 2024			December 31, 2023
Assets
Current assets
Cash	$	1,021,298		$	1,621,778
Trade and other receivables, net of allowance for doubtful accounts		5,280,178			4,382,668
Inventories		29,014			29,146
Prepaid expenses and deposits		1,260,383			1,636,349
Non-current assets		7,590,873			7,669,941
Restricted cash		187,850			185,655
Property and equipment		830,091			1,066,194
Right-of-use assets		266,136			596,063
Intangible assets		6,630,741			8,066,733
Goodwill		12,208,897			12,090,609
Total assets	$	27,714,588		$	29,675,195
Liabilities
Current liabilities
Trade and other payables and accrued liabilities	$	6,453,562		$	6,269,023
Income tax payable		63,433			59,044
Share-based payment liability		23,828			25,246
Derivative warrant liability		75,791			188,042
Current portion of long-term debt		14,271,366			19,812
Current portion of lease obligations		337,671			483,362
Current portion of contract liabilities		1,402,099			1,809,003
Non-current liabilities		22,627,750			8,853,532
Long-term debt		–			13,246,176
Long-term lease obligations		10,701			220,750
Other long-term liabilities		1,225,393			1,179,639
Total liabilities		23,863,844			23,500,097
Shareholders’ Equity
Capital stock		77,568,598			76,230,158
Contributed surplus		9,151,889			8,671,879
Accumulated other comprehensive loss		(1,324,114	)		(670,788	)
Deficit		(81,545,629	)		(78,056,151	)
Total shareholders’ equity		3,850,744			6,175,098
Total liabilities and shareholders’ equity	$	27,714,588		$	29,675,195


VIQ Solutions Inc. Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (Expressed in US dollars, unaudited)


	Three months ended September 30,						Nine months ended September 30,
		2024			2023			2024			2023
Revenue	$	11,116,345		$	10,102,827		$	32,613,632		$	30,674,291
Cost of sales		5,967,429			5,770,743			17,809,341			17,279,369
Gross profit		5,148,916			4,332,084			14,804,291			13,394,922

Expenses
Selling and administrative expenses		4,191,589			5,495,347			12,831,255			16,262,292
Research and development expenses		171,628			186,769			492,154			520,734
Stock-based compensation		254,413			54,974			394,038			893,101
Gain on revaluation of RSUs		(4,457	)		(50,103	)		(51,768	)		(170,091	)
Loss (gain) on revaluation of the derivative warrant liability		(58,517	)		(543,114	)		(108,203	)		(408,600	)
Foreign exchange (gain) loss		(245,480	)		43,287			(733,366	)		689,575
Depreciation		197,914			209,755			587,135			619,310
Amortization		836,301			1,042,071			2,456,647			3,478,045
Interest expense		464,172			343,882			1,259,061			996,974
Accretion and other financing costs		352,006			742,933			1,104,100			1,147,219
Gain on contingent consideration		–			–			–			(10,389	)
Impairment of goodwill and intangible assets		–			–			–			157,464
Restructuring costs		75,180			474,597			71,346			531,463
Other income		(9,792	)		(12,031	)		(31,205	)		(21,438	)
Total expenses		6,224,957			7,988,367			18,271,194			24,685,659

Current income tax expense (recovery)		1,468			7,990			22,575			(32,101	)
Deferred income tax recovery		–			714,743			–			138,224
Income tax expense (recovery)		1,468			722,733			22,575			106,123
Net loss for the period	$	(1,077,509	)	$	(4,379,016	)	$	(3,489,478	)	$	(11,396,860	)
Exchange loss (gain) on translation of foreign operations		141,781			(328,952	)		(653,326	)		89,237
Comprehensive loss for the period	$	(935,728	)	$	(4,707,968	)	$	(4,142,804	)	$	(11,307,623	)

Net loss per share
Basic		(0.02	)		(0.11	)		(0.07	)		(0.32	)
Diluted		(0.02	)		(0.11	)		(0.07	)		(0.32	)
Weighted average number of common shares outstanding – basic		51,812,252			38,804,967			49,323,526			36,078,834
Weighted average number of common shares outstanding – diluted		51,812,252			38,804,967			49,323,526			36,078,834

The following is a reconciliation of Net Loss to Adjusted EBITDA, the most directly comparable IFRS measure for the three and nine months ended September 30, 2024, and 2023:

	Three months ended September 30				Nine months ended September 30
(Unaudited)	2024		2023		2024		2023
Net Loss	(1,077,509	)	(4,379,016	)	(3,489,478	)	(11,396,860	)
Add:
Depreciation	197,914		209,755		587,135		619,310
Amortization	836,301		1,042,071		2,456,647		3,478,045
Interest expense	464,172		343,882		1,259,061		996,974
Current income tax (recovery) expense	1,468		7,990		22,575		(32,101	)
Deferred income tax recovery	–		714,743		–		138,224
EBITDA	422,346		(2,060,575	)	835,940		(6,196,408	)
Accretion and other financing costs	352,006		742,933		1,104,100		1,147,219
Gain on revaluation of RSUs	(4,457	)	(50,103	)	(51,768	)	(170,091	)
Gain on revaluation of the derivative warrant liability	(58,517	)	(543,114	)	(108,203	)	(408,600	)
Impairment of intangible assets	–		–		–		157,464
Restructuring costs	75,180		474,597		71,346		531,463
Other income	(9,792	)	(12,031	)	(31,205	)	(21,438	)
Stock-based compensation	254,413		54,974		394,038		893,101
Foreign exchange (gain) loss	(245,480	)	43,287		(733,366	)	689,575

Adjusted EBITDA	785,699		(1,350,032	)	1,480,882		(3,377,715	)

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 does not have a standardized meaning 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. For a reconciliation of net income (loss) to Adjusted EBITDA please see the Company’s MD&A for the three and nine months ended September 30, 2024.

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 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.