Mr. Sebastien Pare reports

VIQ SOLUTIONS ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS

VIQ Solutions Inc. has released its unaudited financial results for the third quarter ended Sept. 30, 2023. Results are reported in U.S. dollars and prepared in accordance with international financial reporting standards.

"The third quarter represents the last comparable quarter against the prior Queensland Court's Department of Justice and attorney-general contracts, which created challenges in comparative metrics throughout 2023. The industry labour shortages that affected the quarter, particularly in Australia, are being managed but created significant challenges in the quarter for both acceleration of revenue and abatements that impacted our bottom line. These challenges are now largely under control, and the implementation of the NetScribe aiAssist platform is expected to reduce the labour risk in the coming years. Excluding the DJAG contract and the impact of foreign exchange, VIQ would have reported positive year-to-date revenue growth of 1.2 per cent over the comparative period in 2022," said VIQ Solutions chief executive officer Sebastien Pare.

Mr. Pare continued: "Demand is high for our [artificial-intelligence]-enabled transcription and translation technologies to convert complex multispeaker events, such as court hearings, police interviews and depositions, into formatted and usable content. This is confirmed by the backlog that represented approximately 45 days of law enforcement work. While certain challenges have limited our ability to fully recognize this backlog, our bookings remain strong, and evidence of recovery underscores the resilience in the industry and of VIQ."

The migration of court and law enforcement customers in Australia is under way with completion expected in first quarter of 2024. This is expected to improve efficiencies across the organization and result in an increase in margins. These efficiencies, along with the cost reductions associated with delisting from Nasdaq and the continuing operational optimization taking place, will further improve our future operating performance and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Mr. Pare continued: "Investments in technology have resulted in a favourable pivot to a higher percentage of bookings and pipeline in our software as a service and platform as a service solutions. As these bookings begin recurring billing, this will also favourably impact the margins associated with our booked growth."

"While the economic conditions resulting in labour shortages have certainly slowed our cadence, VIQ is focused on using technology, VIQ's strategy of NetScribe AI-enabled platform to enable our segments, including VIQ, resolve the backlog and speed the document creation process. This reduces risk in the long term and accelerates our migrations to AI-enabled solutions we are bringing to market," said Susan Sumner, VIQ Solutions' president and chief operating officer.

Highlights from the quarter are as follows.

Third quarter 2023 operational highlights:

• Revenue and margins decreased in Q3 mainly due to the previously announced contract changes to Queensland DJAG;
• Commenced migrations of Australian court customers to NetScribe in Q3, which is expected to improve gross margins in 2024;
• Gains seen in the insurance vertical with new U.S. client that ranks in the top five;
• Client transition to artificial-intelligence-only drafts is helping to solve capacity challenges;
• Capacity recovery and expansion led to growth in revenue and margins in the U.S. legal and criminal justice verticals versus the prior-year third quarter;
• Australia's market demand remains strong while it also continues to be impacted by capacity challenges;
• Gross margin reductions in Australia are expected to be temporary due to aggressive capacity on-boarding and training costs;
• Q3 bookings remain strong at $932,000, demonstrating continued demand despite capacity challenges;
• Early success from initial AU migrations shows a 50-per-cent improvement in gross margin percentage;
• Increase in AI-only SaaS sales being driven by domain-specific trained AI models.

"Improving VIQ's EBITDA performance is a top priority. We launched a restructuring plan earlier this year, targeting a reduction of selling and administrative expenses of between $2-million to $2.5-million over the next 12 months. We are also implementing a series of measures aimed at improving EBITDA performance, including improved margin attainment from volumes being migrated on NetScribe and domain-specific trained AI models and continued offshoring," said Alexie Edwards, VIQ Solutions' chief financial officer.

A copy of the company's interim condensed financial statements and accompanying management's discussion and analysis for the three and nine months ended Sept. 30, 2023, and 2022 (unaudited), will be available under the company's profile on SEDAR+.

Conference call details

VIQ Solutions will host a conference call and webcast to discuss its third quarter 2023 financial results on Nov. 13, 2023, at 11 a.m. Eastern Time. The call will consist of updates by Mr. Pare, Mr. Edwards and Ms. Sumner followed by a question-and-answer period.

Investors may attend 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 No. 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 approximately one hour after the conference call concludes.

About VIQ Solutions Inc.

VIQ Solutions is a global provider of secure, artificial-intelligence-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 are implemented in the most rigid security environments, including criminal justice, legal, insurance, government, corporate finance, media and transcription service provider markets, enabling them to improve the quality and accessibility of evidence, to easily identify predictive insights and to achieve digital transformation faster and at a lower cost.

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