By M. Marin
Backlog reached record levels…
VIQ Solutions’ (NASDAQ:VQS) (TSX:VQS.V) backlog has reached record levels, reflecting growing demand from existing and new customers and some revenue delays as a result of the pandemic (see below) that moved some revenue into VIQ’s growing backlog.
The company has put in place the appropriate workforce and bandwidth to satisfy the growing number of contracts in its backlog, consistent with its stated strategy to drive further growth and profitability and strengthen its market position. In 2Q21, VIQ added several industry veterans with significant sales experience to its sales team to accelerate its growth in the insurance and criminal justice industries. In 1Q21, the company made several strategic executive leadership appointments to support its strategy to accelerate product innovation and prepare for further global expansion.
… as awareness of need for digitalized content grows; numerous RFPs support positive outlook
Despite the short-term negative impact of COVID (2Q21 revenue of $8.2 million was down about 0.7%, reflecting some revenue delays into 2H21 resulting primarily from intermittent closures of courts in Australia and the U.K.), the pandemic has shone a light on the need for digitalized content for the insurance industry, courts and many other sectors. This has positive implications, we believe, for VIQ and could be a catalyst to accelerate the company’s expected market share gains within its targeted addressable market.
VIQ is evaluating and plans to respond to a growing number of new RFPs by courts and insurance carriers in its geographic footprint, with many for multiple products. With its expanding product portfolio, the company believes it is well-positioned to help customers with multiple product needs and also address a greater portion of its addressable market.
Benefits of transition to SaaS model
The company’s ongoing migration to a SaaS model has positive implications, as VIQ offer customers multiple products and bundled service plans tailored to meet an individual customer’s needs. Benefits include that the hybrid SaaS pricing model will generate recurring monthly revenue and create greater visibility and predictability of the monthly fees.
Strong cash position & access to capital markets
VIQ has a strong cash position to advance its objectives. We believe VIQ’s $12.4 million in cash at the end of 2Q21 provides the flexibility to support anticipated growth over the next several quarters and for potential M&A transactions. We also believe the company will be able to access the capital markets successfully and will have sufficient liquidity to maintain its growth strategy and M&A plan.
Benefits of recent uplisting & omnibus stock plan
We also believe the recent uplisting supports potential for share price multiple expansion. The uplisting of the shares to the Nasdaq (under the ticker VQS) is expected to boost awareness of the company and its prospects, as well as expand the pool of potential investors. Separately, VIQ’s recently adopted new omnibus stock plan ties executive compensation more closely to share price performance, which is another positive, we believe.
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