Mr. Geoffrey Rotstein reports

EQ INC. REPORTS FOURTH QUARTER AND 2022 YEAR END FINANCIAL RESULTS

EQ Inc. has released its financial results for the fourth quarter and the year ended Dec. 31, 2022.

EQ reported revenue of over $2.9-million for the quarter, which was an increase of 38 per cent over the previous quarter and a decrease from the same quarter a year ago. The sequential revenue growth resulted primarily from an increase in the media division, as advertisers increased their spending and continued to focus on partners that utilized the best data, sophisticated AI (artificial intelligence) and the most robust technology solutions.

Revenue for the year ended Dec. 31, 2022, was $11-million. Although this was a slight decrease from the previous year, the reduction was mainly due to changes in the media division. The company has intentionally reduced its focus on media campaigns that did not utilize the full potential of EQ's data and analytics offerings. As a result, these lower-margin campaigns were discontinued during the quarter and, although impacting top-line revenue, it did not significantly impact the company's overall margin contribution. In turn, this change created additional bandwidth for the company to refocus much of its resources toward its higher-margin recurring revenue suite of products.

The company's mandate for 2023 is to become profitable and focus its sales efforts on its higher-margin recurring revenue suite of products. As a result, during the later part of 2022 and into 2023, various costcutting and restructuring changes were initiated to both headcount and operations. The annualized impact of the changes made to date has reduced the company's overall cost structure by approximately $3-million annually. Based on current forecasts, the company expects to be profitable in the second half of 2023, and will continue to monitor its business outlook and make additional changes if required.

During the year, the company also invested significantly into the building of Clear Lake (CL), a proprietary consumer insight platform, to generate a higher-margin recurring revenue line of business. CL, one of the largest investments in the company's history, provides users with real-time access into one of Canada's largest and most comprehensive consumer purchasing panels. The data incorporate aggregated transactional spend data, geospatial insights on consumer location, other proprietary and exclusive data, and the ability to execute against these data with recommended placement opportunities. CL allows users to analyze data that enables them to:

• Understand their customers better;
• Improve insights into their competition;
• Optimize marketing and communication channels;
• Activate media using the most effective segments; and
• Improve overall business strategy and decision making.

CL was officially launched in 2023 and has generated significant market interest. Early indications are very encouraging, and the company has seen traction and interest from clients across multiple verticals. The expenses related to this build were all expensed in 2022 and, as a result, the adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss for the year was approximately $5.3-million, an increase compared with 2021, however, aligned with the company's investment strategy.

Highlights for the fourth quarter and year ended Dec. 31, 2022:

• Increased quarterly revenue by 38 per cent sequentially;
• Awarded an extension for a multiyear engagement with a leading Canadian University valued at up to $5.5-million;
• Extension to a contract, with a budget increase of $400,000, from a major Canadian financial institution was awarded during the quarter;
• Completed the company's new consumer insights platform, Clear Lake;
• Renewed multiyear partnership with one of Canada's largest diversified media companies, valued at up to $6-million; and
• Initiated various cost-efficiency measures expected to drive annual savings of $3-million.

"Our focus during the year was to continue evolving our data offering, generate licensing solutions for recurring revenue and properly align our cost structure. With new data partnerships being contracted, CL being completed and various cost efficiencies initiated, we believe that all of these were addressed in 2022, and we expect to see the full results of these initiatives as the year progresses," said Geoffrey Rotstein, president and chief executive officer of EQ. "While 2022 was a difficult year within certain verticals that we operate, we are pleased with our progress, and how our team and technology have adapted to these changes. We identified challenges early and modified our approach to secure our position as a trusted partner for our most-valued clients."

About EQ Inc.

EQ enables businesses to understand, predict and influence customer behaviour. Using unique datasets, advanced analytics, machine learning and artificial intelligence, EQ creates actionable intelligence for businesses to attract, retain and grow the customers that matter most. The company's proprietary SaaS (software-as-a-service) platform mines insights from movement and geospatial data, enabling businesses to close the loop between digital and real-world consumer actions.

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