Mr. John Gillberry reports

QUARTERHILL ANNOUNCES STRONG Q2 FISCAL 2023 FINANCIAL RESULTS

Quarterhill Inc. has released its financial results for the three and six months ended June 30, 2023.

Financial statements for the three and six months ended June 30, 2023, and for the respective comparison periods, have been prepared to reflect continuing operations and therefore exclude results during those periods from Wi-LAN Inc. ("WiLAN"), which was sold by Quarterhill on June 15, 2023. Q2 2023 and year-to-date operating results from WiLAN, up to the date of sale on June 15, 2023, are reported as net (loss) income from discontinued operations.

Q2 Fiscal 2023 Highlights

• Revenue was $51.9-million compared with $39.2-million in Q2 2022
• Adjusted EBITDA1 was $3.9-million compared with ($8.1)-million in Q2 2022
• Revenue backlog3 was more than USD$500.0-million at June 30, 2023
• Following restructuring and integration initiatives in the first half of the year, selling, general and administrative expenses were $8.2-million compared with $13.0-million in Q2 2022
• Working capital was $109.5-million at June 30, 2023
• Completed the sale of Wi-LAN Inc.
• Announced amended credit agreement with HSBC
• Appointed ITS industry veteran Charles ("Chuck") Myers to the board of directors
• Subsequent to quarter-end, appointed Bill Morris to the board of directors and announced the retirement of Dr. Michel Fattouche from the board

"Quarterly revenue and Adjusted EBITDA were up significantly, both year-over-year and sequentially, due to growth at IRD, progress with our ongoing tolling projects and integration and cost control initiatives," said John Gillberry, Interim CEO at Quarterhill. "IRD, our enforcement or commercial vehicle operations unit, had another strong quarter with the highest Q2 revenue in its history, while also generating strong Adjusted EBITDA margins. At ETC, our tolling operations, we made some tough decisions in the first half of the year in order to lay the foundation for improved operational and financial performance, and that hard work began to pay off in Q2."

"The sale of WiLAN in Q2 provides an excellent home for that business to prosper and it enables Quarterhill to focus 100% of its attention and resources on ITS growth. We continue to make changes to the board to reflect the evolution of the business with the appointment of Chuck Myers in Q2 and Bill Morris subsequent to quarter-end, while at the same time Dr. Michel Fattouche has retired from the board after more than two decades of dedicated service to the Company, first as a founder and executive leader, and later as a board member."

"This is a very exciting time for Quarterhill. We have two strong, and increasingly integrated, ITS platform businesses in ETC and IRD. Both have talented teams, great reputations, and solid prospects for new business. Against this positive backdrop, our near-term priorities are to drive towards go-live dates with our tolling projects, achieve positive Adjusted EBITDA for 2023, maintain progress on our integration plan and complete the search for our new CEO."

Q2 and Year-to-Date Fiscal 2023 Financial Review

Quarterhill's Management's Discussion and Analysis and financial statements for the three and six months ended June 30, 2023 are available at the Company's website and at its profile at SEDAR.

Revenue for the three and six months ended June 30, 2023, was $51.9-million and $90.2-million compared with $39.2-million and $77.0-million in the prior year comparative periods, respectively. The increase in revenue was due to growth in both the enforcement and tolling business units.

Gross profit2 as a value and as a percentage of revenues may be subject to significant variance in each reporting period due to the nature and type of contract and service work currently in process, currency volatility and competitive factors, among other things. Gross profit for the three and six months ended June 30, 2023, was $13.4-million and $18.5-million, or 26% and 21%, as compared with $5.5-million and $16.1-million, or 14% and 21% in the prior year comparative periods, respectively. The increase in the current period is primarily due to better margin performance from both the enforcement and tolling business units as well as higher materials and labor costs in the 2022 periods that were, in part, driven by inflationary effects resulting from the COVID-19 pandemic.

Operating expenses include sales general and administrative ("SG&A") expense, research and development costs ("R&D"), depreciation and amortization and other charges. Total operating expenses for the three and six months ended June 30, 2023, were $14.2-million and $29.9-million compared with $32.3-million and $49.6-million in the prior year comparative periods, respectively. The decrease is primarily due to the cost reduction initiatives deployed by the Company and the allocation of certain selling, general and administrative personnel costs into cost of revenues as well as the absence of a one-time legal settlement that was present in the 2022 comparative periods, of which $14.6-million is attributed to.

SG&A for the three and six months ended June 30, 2023, was $8.2-million and $17.6-million compared with $13.0-million and $25.4-million in the prior year comparative periods, respectively. As a percentage of revenue, SG&A in Q2 2023 was 16% compared with 33% in Q2 2022. The Company has worked hard to drive efficiencies in the business through its restructuring and integration efforts, which are reflected in the year-over-year decrease in SG&A.

Adjusted EBITDA1 for the three and six months ended June 30, 2023, was $3.9-million and ($1.3)-million compared with ($8.1)-million and ($10.0)-million for the comparative prior year periods, respectively. The increase in Adjusted EBITDA compared with the prior year periods is due to the favorable changes to revenue, gross margin and operating expenses as previously explained.

Net loss from continuing operations for the three and six months ended June 30, 2023, was ($0.12) per diluted share and ($0.23) per diluted share, compared with a net loss from continuing operations of ($0.18) per diluted share and ($0.26) per diluted share, in the comparative prior year periods, respectively.

Net loss from discontinued operations for the three and six months ended June 30, 2023, was ($0.16) per diluted share and ($0.19) per diluted share, compared with a net loss from discontinued operations of ($0.03) per diluted share and net income from discontinued operations of $0.55 per diluted share, in the comparative prior year periods, respectively.

Cash used in continuing operations for the three and six months ended June 30, 2023, was $10.2-million and $18.7-million, compared with $45.1-million and $51.4-million in the comparative prior year periods, respectively.

Cash and cash equivalents and short-term investments were $61.0-million at June 30, 2023, compared with $67.9-million at December 31, 2022. At June 30, 2023, Quarterhill had working capital of $109.5-million. Due to the nature of the Company's business activities, operating cash flows may vary significantly between periods due to changes and timing in working capital balances.

Board Announcements

Quarterhill announced today that Bill Morris has been appointed to the board of directors and that Dr. Michel Fattouche has retired from the board.

Mr. Morris is a seasoned leader with extensive managerial and board experience. He spent 36 years at Accenture, where he was CEO of Accenture Canada for 13 years. As Accenture Canada's leader, he grew revenue from $250-million to $1.3 billion and led a team of 5000 employees.

"Bill brings strength in leadership, operational execution and governance to the Company, and we are pleased to welcome him to the board," said Rusty Lewis, Chair of the Quarterhill Board. "Throughout his progressive career at Accenture, Bill led business units with a focus on a variety of industries in both Canada and the US. We look forward to leveraging his expertise as we execute on our compelling growth opportunity in ITS."

Mr. Morris retired from Accenture in 2019 and currently provides advisory services at Tequity Advisors and sits on the board of two private companies - Clearblue Markets and Boreal Carbon Corporation - as well as Pivotree, a public company traded on the Toronto Venture Exchange (TSX-V: PVT).

Mr. Lewis continued: "At the same time, on behalf of the entire team at Quarterhill, I would like to thank Michel for his commitment, guidance and support to the Company. A pioneer in his industry, Michel co-founded WiLAN in 1992 and helped to develop patented wireless inventions that became a cornerstone for some of the most important wireless technology used today. We wish Michel all the best in his future pursuits."

Dr. Fattouche saw Quarterhill through its three phases of existence. From 1992 until 2005, WiLAN focused on wireless products based on his patented inventions. Then in 2006, WiLAN changed its focus to licensing its patented technologies, which included his inventions on 3G and 4G cellular standards. Finally, in 2017, WiLAN changed its name to Quarterhill and embarked on a diversification strategy that has led to the pure play ITS company that Quarterhill is today. Dr. Fattouche will have board observer status until the Company's Annual Meeting in 2024 and will serve as Quarterhill's observer on the WiLAN board.

Conference Call and Webcast

Quarterhill will host a conference call to discuss its financial results today at 10:00 AM Eastern Time.

Traditional Dial-in Information

To access the call from Canada and U.S., dial 1.888.664.6383 (Toll Free)

To access the call from other locations, dial 1.416.764.8650 (International)

Telephone Replay

Telephone replay will be available from 1:00 p.m. ET on August 9, 2023, until 11:59 p.m. ET on August 16, 2023, at: 1.888.390.0541 (Toll Free North America) or 1.416.764.8677.

Conference ID: 52294356 and Replay Passcode: 294356 #

About Quarterhill

Quarterhill is a leading provider of tolling and enforcement solutions in the Intelligent Transportation System (ITS) industry. Our goal is global leadership in ITS, via organic growth of the Electronic Transaction Consultants, LLC (ETC) and International Road Dynamics, Inc. (IRD) platforms, and by continuing an acquisition-oriented investment strategy that capitalizes on attractive growth opportunities within ITS and its adjacent markets. Quarterhill is listed on the TSX under the symbol QTRH and on the OTCQX Best Market under the symbol QTRHF. For more information: www.quarterhill.com .

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