Mr. Sebastien Paré reports

VIQ SOLUTIONS ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

VIQ Solutions Inc. today released its unaudited financial results for the second quarter ending June 30, 2023. Results are reported in United States dollars and prepared in accordance with international financial reporting standards (IFRS).

"Revenue for the second quarter ending June 30, 2023, grew by 5 per cent sequentially from the previous quarter despite some delays in ramping up of new contracts. When normalized to consider the 50-per-cent reduction of the Queensland contract from a year ago and negative foreign exchange impact due to the declining Australian dollar and British pound sterling relative to the U.S. dollar, revenues for the quarter would have increased by up by 3.6 per cent year over year. We are happy to report that our clients appear to be back on track to process evidentiary documentation to pre-COVID volumes after a difficult couple of years in 2021 and 2022 due to the pandemic and labour shortages.

"The company's strong bookings, client renewals, current client volume trends combined with previously announced restructuring and the ongoing platform migrations in our Australian business, are expected to yield gains in gross margins to support a path to positive adjusted EBITDA in the second half of 2023," said Sebastien Pare, VIQ's chief executive officer.

Second quarter 2023 operational highlights

• As of June 30, 2023, a record was set for net new organic bookings of $8.9-million in the last 12 months.
• Delays in ramp-ups of new customers combined with capacity challenges that created delivery backlogs in the company's first quarter and first part of the company's second quarter of 2023 have been resolved.
• Volumes across every region and every vertical, volumes in June and July have now normalized enabling the company to resume scalability.
• Two patent applications were submitted, which will augment the company's speech engine agnostic work flows, improving documentation accuracy and usability of documentation.
• First insurance agency with VIQ's AI-powered FirstDraft technology in lieu of traditional transcription is now operational.
• A new partnership with JAVS that is expected to drive the expansion of VIQ's technology into courtrooms, providing automated draft transcripts of courtroom proceedings.
• 2023 Fortress Cyber Security winner in the data protection category validates the company's commitment to data security.

"After a three-month trial, one of the largest U.S. insurance companies made the decision to not only pivot to utilizing our FirstDraft technology to support their recorded statements, but they also committed to sole source this contract to VIQ," said Susan Sumner, VIQ's president and chief operating officer. "Every day we see validation that the technology we have built is producing a highly usable document for consumption by commercial clients or to improve the productivity of our internal ProEdit solution. The value of our work flow solution, NetScribe is proven by our latest cost reductions which are a result of the consolidation of resources tied to this fantastic platform."

Second quarter 2023 financial highlights

• Revenue of $10.5-million, a decrease of $1.8-million, or 15 per cent, compared with the same period of the prior year, was primarily due to the expected change in the Queensland contract. For the three months ended June 30, 2023, revenue was also negatively impacted by approximately $500,000 due to the weakening Australian dollar and British pound sterling in comparison with the U.S. dollar. Excluding the Queensland contract change and impact of foreign exchange, the company would have reported a positive revenue growth of 3.6 per cent versus the three-month period ended June 30, 2022.
• Gross profit was $4.6-million, or 44.1 per cent of revenue, compared with $6-million, or 49.3 per cent of revenue, during the same period of the prior year. The decrease in gross margin was primarily due to the expected reduction in the high-margin Queensland contract. Additionally, for the three months ended June 30, 2023, revenue was negatively impacted by approximately $500,000 due to the weakening Australia dollar and British pound sterling in comparison with the U.S. dollar. Excluding the Queensland contract change and impact of foreign exchange, the company would have reported a positive current quarter over prior year quarter gross margin growth of 0.7 per cent
• Net loss of $3.6-million, or 10 cents per diluted share, versus net loss of $3.2-million, or 11 cents per diluted share in the same prior year period.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) deficit of $900,000, versus adjusted EBITDA deficit of $700,000 in the same period in the prior year. The increase in adjusted EBITDA deficit was primarily due to the decreased gross profit, as a result of the expected change in the Queensland contract and the negative impact of foreign exchange, partially offset by decreased selling and administrative expenses.

"We continue to align our global resources to evolve into a leaner, more data driven company, with plans to optimize our work force and restructure certain positions to improve our operating performance and adjusted EBITDA," said Alexie Edwards, VIQ's chief financial officer. "In July, 2023, we drew $1-million from our debt facility which will be utilized to fund the optimization of our work force and for working capital. We also completed a $1.8-million private placement offering to fund domain specific AI models, product development and general working capital purposes to catalyze the next stage of growth."

VIQ also announces today that Christine Fellowes has resigned from the board of directors of the company effective Aug. 14, 2023. The company wishes her success and is appreciative of her contributions during her appointment as a director at VIQ.

Conference call details

VIQ will host a conference call and webcast to discuss its second quarter 2023 financial results on Tuesday, Aug. 15, 2023, at 11 a.m. Eastern Time. The call will consist of updates by Sebastien Pare, VIQ's chief executive officer, Sandy Keung, VIQ's finance vice-president, and Susan Sumner, VIQ's president and chief operating officer, followed by a question-and-answer period.

Investors may access a live webcast of the call on the company's website or by dialling 1-888-440-4052 (North America toll-free) or 1-646-960-0827 (international) to be connected to the call by an operator using conference ID 4983233. Participants should dial in at least 10 minutes prior to the start of the call.

A replay of the webcast will be available on the company's website through the same link approximately one hour after the conference call concludes.

About VIQ Solutions Inc.

VIQ Solutions is a global provider of secure, AI-driven, digital voice and video capture technology, and transcription services. VIQ Solutions offers a seamless, comprehensive solution suite that delivers intelligent automation, enhanced with human review, to drive transformation in the way content is captured, secured and repurposed into actionable information. The cybersecure, AI technology and service platform is implemented in the most rigid security environments, including criminal justice, legal, insurance, government, corporate finance, media and transcription service provider markets, to improve the quality and accessibility of evidence, to easily identify predictive insights, and to achieve digital transformation faster and at a lower cost.

We seek Safe Harbor.