By M. Marin
VIQ Solutions (OTC:VQSLF) recently reported 1Q20 revenue of $7.5 million, up 19% year-over-year despite the slowdown in economic activity due to the pandemic. Adjusted EBITDA came in at $0.6 million, an 86% advance compared to 2Q19. For the full year 2020, VIQ expects adjusted EBITDA to be in the range of $4 million to $6 million. Excluding a non-recurring non-cash charge of $5.1 million or $0.39 per share, the adjusted loss per share was ($0.06).
Gross margins remain highly correlated to the customer migration to the company’s AI-enabled platform and VIQ believes the platform has strong competitive advantages that will drive client migration. The platform’s artificial intelligence (AI) means that it “learns” the vocabulary of its target markets. Other competitive advantages include VIQ’s Criminal Justice Information Services (CJIS) compliance certification, which contributes to VIQ being compliant with data sovereignty regulations, according to management. VIQ believes that it is on-track to reach targeted gross margins of 50% to 55% by the end of 2020.
VIQ also expects its addressable market to grow to $10.6 billion by the end of 2021 as digitization continues and it expands to new silos. The company’s traditional focus has been on the law enforcement, judicial and legal and insurance sectors. With the acquisition of ASC Services earlier this year, VIQ has added the media sector.
The company has simplified its balance sheet. It virtually eliminated warrants and convertible debt. Convertible debt was $0.2 million at the end of 1Q20, down from $3.6 million at 4Q19. Its convertible derivative liability declined to $0.3 million from $2.3 million over the same period. In addition, the company also raised net proceeds of $5.7 million from financing activities after debt repayments.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $30,000 annually for these services. Full Disclaimer HERE.