VIQ Solutions (VQS) 14 May 222022 Q1 Earnings call transcript

Good morning, ladies and gentlemen. My name is Emma. I will be your conference operator. Today we are hosting a conference call to discuss the First Quarter 2022 Financial Results for VIQ Solutions. [Operator Instructions].

Ms. is today host Your Laura Kiernan, VIQ. Relations of Investor for Head Please go ahead.

Good Emma. Call. to morning, VIQ you, Solutions' Conference Welcome Results everyone. Thank 'XX First Quarter

we to known that unknown point risks, today's like other I and contain statements factors. and call subject made on Before out information forward-looking uncertainties, begin, would certain to

and of which and the complete uncertainties and MD&A For are company's we on continuous VIQ, discussion other a filings, sec.gov. facing the risks disclosure available sedar.com to refer you

are of in presenters Financial amounts dollars Alexie As unless President Today's a dollar reminder, Chief stated. U.S. are and otherwise all Edwards, Officer. Chief VIQ; Sumner, Susan Operating Officer and

Our us able all call of CEO, to will join for and the prepared emergency the questions call begin. Sumner to answer following and had And the Sebastien be turn a the we'll today. now family will over to not be remarks. Susan able Susan to Paré, Alexie

to you, everybody to Welcome quarter for XXXX. first our Thank Laura. earnings call

happy you are to be addressing in behind key regions the COVID court-related now closures us. to impact be seem the our We of that

return technologies is no to trial and affecting while criminal that utilize the seconds reporters at support notes to behind instantaneously. had word, of to and courts is backlog key rebound a and in the been we murder the reflects a ability the agencies gives the forcing space activity evidenced in see predicted News in the our services and in situation not exactly unique digital transcripts our technology court today. over attorneys the events, closures Florida, hybrid This XX Naples shortage, are in create live them judges the this our events globe. they to This in Lee flag secure around efficient would the trials on the to the also COVID real-time ecosystem. the is option shows with In electronic is across always as lead for quarter technology that we most courtroom This improvements could is have Australia March. that impact also well headline lockdowns. court to the both and upcoming witnessed that new a have normal. the and provide video of gross Southwest of affecting Delivery in -- of February, ways courtrooms in in delayed, options technology seasonality the ensure remote within of rebound stated in resource that is trial dramatic look The March made build facing to this near more Australia. that The selling worst profoundly the in month will the in and Florida, to represents high customers transcripts audio what the months as agencies in that, margin is Services, the and to and the While transcription. not revenue only of in process globe. area technology, is investments solving but from profile justice But free that but in Daily the as to take transcript to the key and April, in issues services using the government January all beginning to the served It in in first impacted our and in expectation to interest the County, business, ability court recovery spoken

efficiencies. in is provide the tools and will needed to create to which beta real Live NetScribe shortage later offset quarter, Our be solution, released this

them help We challenges. their have the critical to solve clients need solutions our courtroom and legal

will both of While house the in gains in court in given globe signed Australia $X.X we and technology large in acceleration depositions, the our numbers receive organic ability is revenue transcription the the QX to at buy acquisition work-flow novel examinations templates, of were drive engagement strategic applications overall place, accelerate regions. enhancements in being pipeline which technology but to services an currently With active under scale source major The will core we and implemented formats, trials trials value hearings. remains productivity contracts to complex documentation to segment to geographic This two increase in-- further reduction customization to will strong. as the to oath, has new and applications. court continue have mix also and the the The not heart for an VIQ's our this models in and across annual annual the our technology our positively contracts transcripts choose editors our a that in estimated addition, in solutions are globe. support to to of and the In believe solutions from response Auscript pipeline both recording across court services to And impact of contracts revenue technologies, clients facilitate their to technology improvements These that headcount usability of we segment. support growth. increased approximately delayed, expected investment only providing growth language million, recurring continue allow sales the serve our three that these will and client most post-COVID. and of

creation create will solution is This increased demand to will testimony shortages help solution systems with the high-margin We managed. that created reporter utilize are edited resources. court by of by and way automating end-to-end court collaborating to major by the our draft transcript those efficiencies in suite a U.S. be

with clients near create ability with We migrate to These and to ways to information the court time of prioritize newer segment, search, data our the will that trial and QX technologies QX year. deliver to key launched collaborating in clients that elements. the FirstDraft and desire be to this real examples to U.K. the improve of use reflect of are will notable accessibility content in new in

Our to in VIQ's the recognizes around transparency courtrooms efficiencies innovative leveraging approach recent world. Fast AI create to award and Company drive

suite an of the services end-to-end solution and Our transcribe, the collaborate record, and room for technologies provides of court to future.

to We our to trial. The of our for aiAssist are biggest honored be workflow and meaningful Fast of make the is by the of change. ability our technology Company recognized to integration solutions central our end-to-end success

to technology and verticals, platforms gross including to courts. margin all are realizing of -- our year million at $XX the goals integration across to our improve on We continuing revenue our track this in achieve least reflect

XXXX acceleration from see XXXX. as We the an sales of demand from court expect managing and to technology courtrooms closures of in systems resulting stress and recover increased

New this will this products year the to launched later and of depth support growth our solutions. be end-to-end

who over speak Alexie financial Now I this our will about will hand results. to

to open then your will lines the We answer questions.

afternoon Thank everyone. And morning, good evening, you, Susan. and good good

-- of Some of technology These by our QX highlights were and QX. XX%, acquisitions sales in increase revenue partially Auscript by of TTA. million include the offset $XX.X driven by lower

strong stated, we trials and a pipeline Susan year. active this major technology have As three

enforcement; of was The insurance; vertical due or comparative of million, in $X.X law evolve. was profit mix revenue was continues by law courts XX% the and gains revenue, XX% to firms; in XX.X% to government XXXX. in XXXX. revenue partially same or $X In and and compared justice, period the million media, increase of QX Our technology and gross U.S. to including offset versus by XX.X% acquisitions lower for for productivity quarter XX% mix including by Gross the QX, primarily profit corporate, criminal legal, XX% vertical combined. revenue

comparative million wage In in in the addition, includes XXXX period $X.X subsidies. COVID-XX

XX, XX.X% in the This Excluding versus profit yet be represents comparative COVID-XX wage for increase XX-basis have includes the XXXX, be would period acquisitions margin in XX.X% subsidies, to months integrated. a ended point gross that which three March XXXX.

of was services higher in EBITDA sales negative $X.X primarily million Adjusted XXXX. The EBITDA by versus Adjusted million lower technology Adjusted fully related $X General offset Selling, by was higher expenses. EBITDA and quarter gross Administrative not technology profit and of -- driven first decrease and the revenue in Our positive

Additionally, we wage the in subsidies XXXX COVID-XX had in period. $X.X million comparable

post-acquisition has SG&A. expected in impact material happened in favorable past, a consolidation the on is result As to

late closed results this our margin quarter. pre-integration year, of last reflect fourth acquisition gross the that Given quarter in

integrate that gross we expect overall margins acquisitions this our year, we will As gradually lift.

leverage Our operating SG&A will gain EBITDA. and begin expenses we to as generate positive as we slightly decrease

the This represents track quarter our first of metrics progress key to business. of core release the

few is we the this minutes to metrics, will presented time those found key you a within take with takeaways share the these Given metrics. I have first

gross without to seen our significant improvement by technology, XX.X% which margin driven migration our over-year We services the core technology subsidies. in increased from XX.X% to year have

impact acquisitions. technology, new furthest cost drive move and and We and operations is improvement results showed improved in services Auscript of into reduction margin, TTA The technology And gross beginning showed in will continued transcription, of produce remaining XX% the integrate the to along produce our number the the integration, clients which consolidating particularly of the as VIQ space, the influence and migrate time while we of particularly we minute legacy transcription. our impact them U.S., in in technologies. a as the a in a a will minute the to to our negatively to integrate continue

acceleration margin is expected. Additional

no respect segment late Historically lowest QX to is This court mid, different. that balance with because is and significant of cash the late recess for is $X.X Our Australia was in to portion Million. at our in QX the 'XX to collections tied has business January. closes QX December been a quarter

in our Additionally, especially impacted collection resignation Australia. finance staff of negatively has efforts,

However, in we have cash QX. a positive already seen inflow

throughout will which of by seeing realized organic integrate are resulted in as The we services improved technology technology XX%. technology be as measures during and services operations XXXX. an performance sales well improvements bookings -- our increased pipeline activity, strengthened. revenue Related We as are key meaningful has the

commitment closures QX, have with to for even the our the of least us at firmly We revenue, the positions that year. achieve seasonality million and in XX shown

Score our translates track results engagement know into score did based on client in that highly base. the secure customer NPS a QX, shows the we XX, Promoter we not While world-class XXXX, do which early of Net of

and in performing and QX, expected. year. that leaves efficiencies. particularly the from and We resulting that is beginning the is in rest post-COVID impact of indications very the post-acquisition consolidation for VIQ, in results of summary, as March, QX SG&A us So, in the the performance The operations recovery measurements of quantitating technology are confident for QX favorable shown in believe normal the show

like Now, to to operator would I hand Operator? for session. the our Q&A over it

Your Brian comes Kinstlinger Alliance from today Partners. with first question Instructions] line Global [Operator the of

line Your open. now is

recovery and like the talked the that I fourth And my in taking staff And Thanks first you've for new quarter. MD&A question. great from here quarter the about.

running are automation, only XX% that I want which minutes through to on First, touch the transcription to date. was

First, automation? use are And at that to does you be expect of Auscript TSA when the there automated do your cases And you represent? cannot entire some use on look and when business, platform? so, that if what percentage then book

Brian. asked. Thanks I'll they that Hi, the order the question, in too, for great answer It's So a question. them were

In we terms as in of December. TTA Auscript and know, on closed just Auscript, you

and to We which actually automation that migration, contractor the a customer happen integration, in may Australia transaction always year. have a as solid we are do, contract is take essential We're speech-to-text it again, implementing that also the But to stabilizing that. working always very that to anticipates we of the the that that toward experience. mid-year. migration second doesn't late half planned earlier influence negatively the migration we in in on of very the have place process, than large The both plan us

technology And right, the development the able required it of are migrate see will readiness of XX% in means couple influence next e-commerce the They only They the see customer And platform. order looking the In application may not not to late begin that? may it TTA to sure that you sufficient migration. yes, be pipeline. we're is move. and that that And of 're about be to in will overall the to the represents that excited them. will in point, So of to And of make you user of aiAssist in that require in we base the of toward, that Yes. when also and that you'll they what to that but on that as workflow very are it remaining of as customers different On maximize TTA, acceleration the we in about weeks, clients that that revenue. the both of variations media that's XXXX. successfully technology to such There efficiency the NetScribe. evolution well. prospects the incremental not our the The aiAssist, platform new use not But technology. of segments certain introduction with make your we will experience. may to the may customers the may our but use make the there or goal conjunction applications, be platform back-end NetScribe

So But we XXXX, as to expect XXs exit I mix XX% we're is. into constantly say to what right it's that XXXX, XXs. evaluating the the that will be in high fair get that think

That's you your is in and the talk about more But presence there. Australia wow. you're follow-up the courts Oh, huge. limited realize U.S. I can My is, making progress U.K. than

Lee piece anecdotal You had a County. about great

handful market? Do attacking A have of salespeople? the the market? is And, how of you are pipeline salespeople? are more direct the So specifically, How attacking direct you tons how you evolving?

we organization. direct So the United in States sales have a

distribution that talked bit We in we a last little the earnings channel have also call. about

-- sit also well the enablement Carahsoft the NASA federal the for is on as as We GSA framework the government. enablement which

As you our customers the one largest EOIR in of United know, States. is

We upon the going certainly depending customer what approach toward be So -- hardware, and a services sell. combination is, of of technology, we're will how the the combination of will strategic what we do -- our change to both. requirement

terms Midwest governmental a going sale technologies delivery entities believe you're approval way In SaaS, services. is right United where the independent, to will the which world because to difference that those capture believe going that solve in to transcription the the of I other is see is the we're unique in be resource this geographies. a end-to-end the we in services accelerate the process now States, that complexity to more we think technology in-house end-to-end the be they in services and to court of States. the buy requirement to crisis the that in technology, testing you absolutely of sales States transcription I the in experiencing facilitated for versus the see bifurcated that they're versus the in that then U.S., of application approach rest court many the United that of integrated systems why tend United have and in

contribution can first quarter? the you question. more provide two queue. I'll the in get One the Great. total Then revenue acquisitions back in the Alexie, from

For the first quarter?

Yes.

$X million.

Great.

$X million.

guys. much, Thank you so Thank you.

Okay.

with question from Paradigm line the next comes Daniel Capital. Rosenberg Your of

Your now line is open.

slight my and know for the My one Thanks taking first mentioned question. around had expecting revolves you selling I there. a administrative expense you're decrease line.

a So, what integrated? I look level fully having the through like wondered acquisitions think just does normalized as you

the Daniel, Thanks, question. for

In integrating number we I QX. of that at terms have when of -- factors But we good acquisitions. look of level, a because use would SG&A, the a influenced normalized

it's yet influence a it's range, factors of year but not too it. and We terms some -- there the the of guide, a have some first made in quarter is -- consolidation where and many QX efficiencies. changes a realizing -- it's But quarter of the it's

don't QX. telling to get as of a of So QX -- you to I factors number want that the you because use guide influence really

progress expect favorable we is acquisition, I through as to million, will I As the a $X.X still that SG&A And QX those indication is higher be. you get acquisitions. we impact mean, look our attributed think. from the you $X at And better of that to of to progress million SG&A -- year, integrating by what QX those we a When going these last it's integrating acquisitions. get versus year,

in consolidation you in in improvements after And -- last -- and us the -- we to saw quarter announced announced that. second the jump we where SG&A. year Daniel, add I'll just I

you'll consistent me our second amount talk the of going project think towards to the are see time to to from that also same the about. you're approach continue I that into you've heard in But half that consolidation post-acquisition the our improvements year consolidation. of tied Titan towards see

utilizing administrative as begin will where we function attrition We secure headcount can replace lower support still cost that regions in provide to resources have results. global for

for half And excited well. the going second that's about year we're of mean very to the what so as

that's interesting the point And labor front. an around

in changes terms just human seeing capital? you you're So, the any in demand? cost or transcription, you changes in could that to guys of Any or pricing dynamic supply speak labor accessing

is extraordinary there Certainly, demand. an amount of

contracts. we're to very, sovereignty are able very the to the distribute fortunate exist is that globe it We that possible degree demand certain the without within of that around the restrictions

to costs some see costs. costs migration from changes the incremental You skewed by will reduction of the the editing transcription of in offset of to cost CPI the

trend demand, the competitive will where kind which a high force. recruiting you on train we're migration based a also labor for pivot more we more It also market to we worker. in moving labor a in labor still organization, perfect of be new can seems to different seem our editing stay-at-home what We're be, function a editing from into So a as to see market the to downward more even transcriptionists, the from on cost. seeing

are getting from take COVID. a to of terms are skillset we are in not will pipeline them industries work to but large allow So that post coming applications home new in to a order that from are on the continue changing people in that industry very

team and larger in had for past on wins. that. spoken to the with the contract focus Thanks I and a know type greater sales Okay. you -- organizing RFPs

Yes.

opportunity that some sales wondering you view pipeline and just to was the terms ability provide in could there your of color around I if how you convert?

we we -- won stalled I years delivering terms acceleration get and RFPs. was higher this because for into extraordinary speak heard out to So XXXX get working it time won -- job of What -- -- the of the that in took over on of that saw the you've award we but had before won't an a RFP then been we're doing the to a in we me door. specifics major two actually and

decisions, now those of because beginning the of All systems, the are pressure to accelerate. court around

So comments RFPs build big significant. And the pipeline the organic see announced last lot responding of that in pipeline RFP we years. also of the pretty services of of to just a part took contract longer results of technology our the won that was we're terms It the in to that into revenue. the my is that part for the two that you for was

So we're built of velocity factor the RFP out up It's haven't acceleration. the because terms beginning a COVID that's see to result coming we slowdown not seeing there that in much team. the as but a that not of that of was of in backlogs you're that now RFPs

think year. entire RFPs we last the done I as So QX many as year we've in in did

just that So terms putting through in an new of we're velocity gives the of what idea group. that you

Great. That's good to hear.

Lastly just me, balance from sheet. the on

cash. in the think ended you as and does just wondering, move acquisition? million the it's So and payables receivables the with quarter, was how I digesting also I in working $X.X term, capital you're near

Great Daniel. question, Yes.

my of $X.X our terms tough we a some indicated terms down efforts. remarks, of collection is staff quarter -- in of in in in I million. balance members Australia was always And cash primarily. As QX our collection prepared the impacted negatively by the was affecting receivables. It closures were

a that of trend seen cash. reversal the collected already outstanding of lot QX already in where we we have a So

of a acquisitions action efforts. collection the to to we the see working take capital the QX show We consolidate as and collection fruits expect we So positive efforts.

Instructions]. [Operator

Your comes Buck Scott next with H.C. Wainwright. from question

Your line open. is now

have to between I've apologize and back of jumping want asked. any these been forth calls. I if been

in business as see momentum potential going contract a still there? meaningful there What just that you there First of one the amount me, can new do opportunity Is from guys with the you forward? Australia. given

RFPs in we will for I major in. Scott, months will as have you the will that -- see to were those two services. think, have We we be this participating look year and predominantly, then -- And next, three we

into is out see I award you'll RFPs of that a X-year is crawl as, upside. of out in technology-only or once post-COVID that end-to-end recovery. post large opportunities more becomes But of very lot region. We the won an begin to think available. to And recovery again, begin us and is positions for have well you've extraordinarily several business before chunks, -- There COVID award which they integrated to crawl mean, I the a X-year in about there window solutions.

year. So, was it last quiet year

this value year a awards -- haven't year Next have the are XXXX. two right significant what pretty of of we'll States now. end of to And gain year seen we the the technology migration last seeing SaaS actual that toward believe the the that the solutions years will that in for this in accelerate or we're United that more is will we integration

good really color. some That's Great.

think the up I longer-term the meaningfully what feeling Second sequentially should How about on we and one. opportunity? gross was year-over-year. Gross margin the business? is margin mean,

be gradually in gross We're As look for we that was on the of when those able this expect we target that to see Susan gross as And the year we lift. XX% margin XX.X%. our to noted, we'll alluded see none In to achieve gross as at Scott, acquisitions start the earlier, confident -- we two from Australia provided migrate we to margin already that QX those. platform, fact and our customers improvements court to guidance, XX% we margin.

uplift an later We going expect show to year. this margin gross

years, gross margin business? then five this Okay. can in And XX%, That's helpful. be XX% a

You -- know what

I --

is I We are say, can we Scott, -- constantly implement to what improvements. going that

as future, those three that usually on acquisition, months, negatively our do the our have We we the if the margin six migrate goal continuous in platform. the to but gross that expect to our impact said, customers to acquisitions is gross improvement to, in I margin. know Do first may depending

think I --

All that. right. appreciate I

Yes.

to produce it by think line we at segments than that is that minute believe significantly cost be documentation in is produce cost that Alexie to is our a you of I we less the about, bottom is able talked In XXXX, usable XXXX, I that addition to if Alexie what said, to that mean, will sometime look today. a produce the document

do I guys from just but And don't helpful. before, one you the potential the That's expense Okay. last M&A deals? you've if Alexie, is know recent from what synergies see me. disclosed then,

Didn't Could Sorry. you repeat the get that, part. first Scott?

sure guys from integration M&A the not the this but of think is you for a have Yes. if I'm expectation disclosed expense what reasonable synergies you deals? recent before, do

Scott. Yes. -- synergies we different cost consolidation that going now, on process be that we will speak those And are and of We're through the acquired. savings as businesses and we based the work

favorable expect those in through our a We QX QX. to to starting in flow and impact SG&A

now. We we're have there -- for SG&A those numbers what advantage in quantified two taking our But right are a of those number that acquisitions. of opportunities reduce the to

the additional Okay. And guys. the on year. strong a Appreciate congrats color, start to

Thank you.

Scott. Thanks,

next the Global with Your Brian Kinstlinger line question, comes again, Alliance of Partners. from

Your is open. line now

heard I had -- Thanks. that was headwinds the first of year saying March faced for the plus. in so correctly out heard last unfortunately that many quarter I worked you company think the I you

far an So going basis? Adjusted we the the breakeven? to in I forward. going it we profitable first weren't expenses guess and sounds compared Was high I'm be they were and look at it curious I at was where to were like little a EBITDA company bit mean, that April, as look off March at you quarter

the five was we a have for, it shut courts down indication Also with Australia. court Brian, a is March Brisbane were results, said, turned which by closures month us that QX days. comer. that have the look at COVID there we think, what in was flood I So provide we when impacted in -- good

what But -- we a on to have seen are on based negatively March. in these in results, from latest and it's we're the EBITDA numbers profitable we right February. from January that forward impact be going seeing we where direction going the based believe that March trend So

so speak in the to right cannot disclosed But have yet, direction. what based that. to haven't seen We we seem on quantified in trend or we we April March,

no time. like are closing remarks. further at conference the for I this Sumner tum Susan There back over to would questions to

great and wish you Thank talking for in today. We X, he QX know to AGM time Seb hope about forward with have the time and this best about June everyone - XXXX. QX at later a I looks speaking participating the all excited about really I We summer. weekend. certainly safe were his the and results family you guys spending your on and

attending. today's call. Thank for This concludes conference you

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