VIQ Solutions Inc.
TSX VENTURE : VQS

VIQ Solutions Inc.

April 29, 2016 18:42 ET

VIQ Solutions Reports Fourth Quarter and Full Year 2015 Results: A Transformative Year and a New Growth Trajectory

MARKHAM, ONTARIO--(Marketwired - April 29, 2016) - VIQ Solutions Inc. ("VIQ Solutions" or the "Company") (TSX VENTURE:VQS), a global expert in secure digital media technology and services, today reported financial results for the year ended December 31, 2015. Results are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

VIQ experienced a year of major transformation, with the positive effects now firmly entrenched. A strong financial year-end performance closed the fourth quarter with profitable adjusted operating income, taking into consideration certain stock based compensation costs detailed below. The quarter was driven by market diversification and strengthened revenue performance from software and services that resulted in increased margins.

The Company also greatly improved its year over year financial performance, including a 30% increase in high-margin software sales and higher recurring maintenance and support revenue. The software and related revenue segment of the Company posted a profit of $0.7M for the year versus a loss of $0.5M in 2014.

VIQ was profitable for both Q4 and the entire fiscal year if stock based compensation adjustments, certain one-time Dataworxs acquisition costs and company restructuring costs were eliminated.

"The much improved financial statements are showing investors that our transformation is already yielding positive results," said Sebastien Paré, President and CEO of VIQ Solutions. "We are building sustainable growth based on quality earnings and the Company is nearly debt-free. We will move through a few more transitional quarters before reaching sustainable profitability later in 2016. We continue to make strategic investments in our cyber security IP, market penetration in medical and law enforcement, and global sale channels."

The Company also finished the year in a strong cash position due to a significant increase in the number of recurring software support and maintenance agreements and from strategic financing from our committed shareholders.

"Our current growth phase, particularly in software and recurring maintenance revenue, positions VIQ in a favourable cash flow position that investors will find more evident in future income statements," said Mr. Paré.

The Company's 2015 financial performance was positively impacted by the Dataworxs acquisition, providing VIQ with an instant, indelible footprint and stellar reputation in law enforcement, medical, insurance, and legal markets in North America and Australia. Building on the Dataworxs customer base and complementary digital solutions, VIQ added many new customers in these markets in the fourth quarter. This trend is expected to continue in 2016. VIQ added new contracts or upsold existing contracts at a rate of approximately one every two or three weeks, notably many outside the Company's traditional court market.

In 2015, 73% of VIQ's software revenue came through the Company's global partner network of local integrators, AV experts and authorized resellers, while 27% of revenue was direct.

"We will continue adding strategic partners in 2016, primarily those with experience and expertise in medical, cybersecurity and law enforcement," said Mr. Paré.

2015 Business Highlights

  • Appointed Sebastien Paré as President and CEO, effective February 1, 2015 as part of the management and Board of Directors restructuring process initiated by shareholders at the Annual General Meeting in June 2014

  • Increased software revenue by $0.6M over previous year, while software margins remained strong at 74%

  • Excluding items such as stock-based compensation of $0.42M as well as one-time costs related to the Dataworxs acquisition of $0.1M and cost restructuring of $0.6M in the first three quarters, 2015 would have had approximately $0.12M in profit for the year

  • As of December 31, 2015, cash increased more than $0.9M from the previous year, allowing the Company to continue market diversification initiatives and pay down most of the remaining debt

  • Completed the acquisition of Dataworxs, a leading provider of digital audio and speech recognition software, via a non-brokered private placement

  • Established a new diversified revenue model for software and related sales, with a ratio of 50% courts, 34% public safety and 16% medical as compared to 2014, when revenue was almost exclusively from courts

  • Increased recurring revenue by 50% on a pro forma year over year basis, an impact that will be fully realized in 2016

  • Reduced operating costs by $1.4M on a pro forma year over year basis, an impact that will be fully realized in the financial statements later in 2016

  • Awarded enterprise level courthouse rejuvenation contract with the Abu Dhabi Judiciary, including strategic integration with Cisco video-conferencing solutions

  • Awarded digital capture and management contracts with law enforcement agencies in the US, with additional new contracts awarded subsequent to the period, that provided VIQ with critical customer references in law enforcement and increased revenue in the public safety customer segment

  • Awarded two new medical audio capture, routing and transcription workflow contracts in Canada and the US, as well as a breakthrough medical transcription contract for Spark & Cannon in Australia announced subsequent to the period

  • Announced a new lineup of innovative web and mobile solutions, including a simplified touchscreen graphical user interface for tablets and a smartphone audio video capture app for iPhone and Android

  • Increased software and maintenance revenue by 48% outside of North America with important new customers in Europe, the Middle East and Africa (EMEA)

  • Invested in new sales coverage in EMEA, a key high growth region, via a new sales appointment

  • Increased pipeline opportunities by 125% year over year, including innovative pilot projects with largescale US federal agencies, tier 1 US medical centers and law enforcement agencies in the Middle East that are expected to convert into new engagements in 2016

  • Our cybersecurity intellectual property is now paramount, lifting us above competitors and proving vital in our ability to attract law enforcement, military, medical, immigration, insurance, court and legal customers with the highest demands for security and privacy

  • From December 31st 2014 to December 31st 2015, VIQ's market capitalization increased more than four times

  • Issued twenty one customer related press releases, as compared to one in 2014, in an ongoing initiative to better communicate our strategy, vision, and successes

Financial Results for 2015

Detailed financial information and Management's Discussion and Analysis of Results and Financial Condition for the year ended December 31, 2015 will be posted on the SEDAR website at www.sedar.com. The financial information included in this news release is qualified in its entirety and should be read together with the audited consolidated financial statements for the year ended December 31, 2015, including the notes thereto.

About VIQ Solutions Inc.

VIQ Solutions is the leading technology and service platform provider for digital evidence capture, retrieval and content management. Our secure modular software allows customers to easily integrate the VIQ platform at any stage of their organization's digitization, from the capture of digital content from video and audio devices through to online collaboration, mobility, data analytics and integration with sensors, facial recognition, speech recognition and case management or patient record systems. VIQ's technology leads the industry in security, meeting the highest international standards for digital/cyber security and privacy, including military and medical regulations.

Our solutions are in use in over 20 countries with tens of thousands of users in over 200 government and private agencies including law enforcement, immigration, medical, legal, insurance, courts, and transportation and transcription services. VIQ also provides end to end transcription services to several large government agencies through our Australia-based reporting and transcription partners. VIQ operates worldwide with a network of partners including security integrators, audio-video specialists, and hardware and data storage suppliers. Managing digital media evidence is what we do, and we do it better than anyone else. For more information about VIQ Solutions, please visit www.viqsolutions.com.

Forward-looking Statements

Certain statements included in this news release constitute forward looking statements or forward looking information 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 or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this news release include, but are not limited to, management's targets for the Company's growth in 2016.

Forward looking statements or information is based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although VIQ Solutions believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because VIQ Solutions 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 news release, assumptions have been made regarding, among other things, the Company's recent initiatives, and that sales and prospects may provide incremental value for shareholders. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by VIQ Solutions and described in the forward looking statements or information. These risks and uncertainties may cause actual results to differ materially from the forward looking statements or information. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.

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

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

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