VIQ Solutions Reports First Quarter 2020 Results and Updates 2020 Outlook

VIQ Solutions Inc. (“VIQ” or the “Company”) (TSX Venture Exchange: VQS and OTC Markets: VQSLF) a global provider of secure, AI-driven, digital voice and video capture technology and transcription services, today reported financial results for the first quarter 2020 and updated its 2020 outlook. Results are reported in US dollars and are prepared in accordance with International Financial Reporting Standards (“IFRS”).

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“We completed another great quarter achieving several milestones against our long-term strategy to significantly increase and improve revenue quality, migrate our clients and our workforce to our proprietary technology platform, and, advance our capital markets journey,” said Sebastien Paré, VIQ President and CEO.

“Recurring revenue grew by 31% in the quarter, positive EBITDA was generated, and we closed a number of important organic wins, bolstering our client base. We added two new accretive, non-dilutive acquisitions and a fourth growth vertical to our portfolio of B2B customers. Conferencing, Finance, Media and Political digital content, strategically diversify equally, our long-term recurring and organic revenue.”

“We also reported a rolling backlog of $3 million in new SaaS Technology orders which further supports the accelerated digital transformation underway within our markets,” said Mr. Paré.

Key First Quarter 2020 Financial Highlights include:

• Revenue of $7.5 million increased 19% quarter-over-quarter,
• Recurring revenue increased 31% from $5.5 million to $7.2 million, which represents 96% of total revenue,
• Generated 72% of revenue in the United States, 26% in Australia and 2% in EMEA and Canada,
• Gross profit of $3.2 million represented 42.8% of revenue versus 47.8% of revenue in the prior year. Lower gross margin was due to the impact COVID-19 on our Courts vertical which usually produces higher gross margins plus the impact of FX. Additionally, Q1 2019 gross margin of 47.8% included hardware sales that were not repeated in Q1 2020. As previously stated, VIQ is not pursuing hardware sales, instead is working with its partners to fulfill hardware orders in the future.
• EBITDA and Adjusted EBITDA were $0.6 million, representing an increase of 86% year over year,
• VIQ recognized a net $5.1 million in one-time, non-cash expenses related to the conversion of Notes to equity during the quarter. The approximate impact on net earnings per share was $0.39. Excluding the impact of this one-time non-cash interest charge, inducement charge and notes revaluation expense related to the convertible note, the net loss per share in the first quarter of 2020 was $0.06 as compared to nil in the first quarter of 2019,
• Issued 1.0 million shares in the first quarter of 2020 due to the exercise of warrants for approximately $1.6 million bringing the total outstanding share count at the end of the quarter to 18,263,139 shares,

“During the quarter, we also converted $6.4 million in convertible debt to equity with strong support from all Noteholders for an early, non-cash, exercise of the Note. This allowed us to optimize our capital structure, increase stock liquidity, strengthen our balance sheet and is in alignment with our shareholders,” said Alexie Edwards, VIQ CFO.