VQS: Enhanced Financial Flexibility to Support Organic Growth & Strategic M&A

By M. Marin

NASDAQ:VQS | TSX:VQS.V

READ THE FULL VQS RESEARCH REPORT

Enhanced financial flexibility

VIQ Solutions (NASDAQ:VQS) (TSX:VQS.V) recently raised US$18 million through a registered direct offering. With pro forma cash estimated at over $25 million and a strategy to leverage M&A to acquire transformative technology that can help accelerate growth, we would not be surprised to see VIQ make an acquisition in the near-term.

Backlog reached record levels…

The company’s backlog has reached record levels, reflecting organic growth from new orders. Demand from existing and new customers has grown, while some delays as a result of the pandemic moved a portion of revenue into backlog. In addition, the Queensland, Australia contract is in backlog. This contract represents the largest contract in the company’s history and underscores the advantages of the VIQ AI technology platform, in our view.

… while awareness of need for digitalized content is growing …

Despite the short-term negative impact of COVID, (which potentially could also impact 2H21, causing a short-term shortfall from our forecast) 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.

… and VIQ is responding to numerous RFPs, supporting positive outlook

In addition to backlog, 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.

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