Mr. Peter Kanniah reports

EQ INC. REPORTS PROFITABLE FOURTH QUARTER AND 2023 YEAR END FINANCIAL RESULTS

EQ Inc. has released its financial results for the fourth quarter and the year ended Dec. 31, 2023.

The company is pleased to report that revenue for the fourth quarter increased by over 19 per cent sequentially and 7 per cent from the same period a year ago to over $3.1-million, as client demand for data driven solutions continued to grow. Gross margin for the quarter increased to 49 per cent, a significant improvement year over year, and as a direct result of the value generated by combining AI (artificial intelligence) solutions with vital data assets and targeted media. The company was profitable during the quarter and recorded its strongest adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in almost a decade. The adjusted EBITDA improved to approximately $200,000, compared with an adjusted EBITDA loss of $1.1-million for the same period a year ago.

Revenue for the year ended Dec. 31, 2023, was $10-million. After years of investing in technology, data and AI-driven solutions, one of the main goals in 2023 was to drive profitability. As a result, the company reduced its focus on campaigns that did not utilize the full potential of its data and analytics offerings, discontinued lower margin campaigns, and improved its adjusted EBITDA each quarter, resulting in a positive EBITDA for the fourth quarter. Although these changes resulted in a slight decrease in revenue from the previous year, the gross margin improved to 45 per cent, up significantly from the 37 per cent in 2022, and the adjusted EBITDA loss for the year was approximately $1.4-million, compared with $5.3-million in 2022. The company also recognized a one-time gain of $500,000 due to the reversal of acquisition related transaction expenses and an impairment of goodwill and intangible assets of $3.8-million, which were related to historical acquisitions.

Over the course of the year, the company continued to invest in Paymi, its consumer-facing application, and Clear Lake, its insights and analytics dashboard. These investments helped build additional scale to the company's proprietary zero party data assets and continued to generate significant market interest and momentum. They also formed a strong foundation for the company, as it turned its focus to higher-margin and more recurring revenue lines of business. Early results from these investments are very positive as interest and traction are being shown from clients across multiple verticals.

"Profitability will continue to be a focus for the company in 2024," said Geoffrey Rotstein, president and chief executive officer of EQ. "With our cost structure effectively streamlined and data products and licensing solutions ready for market, we expect to see the full results of our hard work and investments materialize in 2024. Innovation continues to be at the heart of our organization, and our team is poised to use our proprietary data and technology products to drive AI solutions that deliver real business value."

Non-IFRS (international financial reporting standards) financial measures

EQ measures the success of the company's strategies and performance based on adjusted EBITDA, which is outlined and reconciled with net loss in the MD&A (management's discussion and analysis). The company defines adjusted EBITDA as net loss from operations before: (a) depreciation of property and equipment and amortization of intangible assets; (b) share-based payments; (c) finance income and costs, net; (d) depreciation of right-of-use assets; (e) impairment of goodwill and intangible assets; (f) gain from acquisition related transactions; and (g) restructuring costs. Management uses adjusted EBITDA as a measure of the company's operating performance because it provides information on the company's ability to provide operating cash flows for working capital requirements, capital expenditures and potential acquisitions. The company also believes that analysts and investors use adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-IFRS financial measure is used in addition to, and in conjunction with, results presented in the company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies non-IFRS financial measures having the same or similar names. In addition, the company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

An attached table reconciles net loss from operations and adjusted EBITDA for the periods presented.

About EQ Inc.

EQ enables businesses to understand, predict and influence customer behaviour. Using unique data sets, 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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