By M. Marin
VIQ Solutions (OTC:VQSLF) (TSX:VQS.V) reported 1Q21 results earlier this month, with revenue reaching a record $8.3 million, which represents a roughly 9.4% y/y advance. The revenue increase primarily reflects higher software license sales, professional service revenue and software support, as well as the full quarter consolidation of acquisitions made in 2020.
Revenue in Australia, where results had been impacted by the pandemic and accompanying closures of courts and many businesses, grew roughly 22.5% year-over-year. VIQ is optimistic that the openings in Australia portend well for overall trends. Australia accounts for about 29% of total revenue.
Gross margin for 1Q21 was 49% compared to 43% in 1Q20. The increase in gross profit is primarily due to higher software license and support sales, as well as productivity gains as the company migrates its customers to the NetScribe AI-enabled platform. VIQ also received COVID-19 related wage subsidies.
2021 Outlook For Accelerating Organic Growth …
In 2021, VIQ intends to focus on measures to drive further growth and profitability and strengthen its market position. We expect revenue momentum to build over 2021. For instance, the above-noted 1Q21 revenue advance in Australia bodes well for the $30 million multiyear contract with Queensland in Australia, which management expects will commence this year. The contract term equates to $5 million of annualized revenue over a six-year period, with expected gross margins of 50% to 55%.
VIQ also expects to begin generating revenue from its new First Draft product this year. First Draft enables faster turnaround of transcripts in advance of editing, converting audio files to text quickly by leveraging the VIQ speech recognition engine.
… Potentially Enhanced By Strategic M&A
Strategic M&A has long formed a core component of the company’s strategy. In 2021, VIQ intends to leverage M&A to acquire transformative technology that can help accelerate growth. The company is also open to expanding its global footprint via strategic M&A and targets at least two acquisitions. The company has a strong cash position to advance its objectives. In 1Q21, VIQ closed an upsized $15.3 million equity offering and ended the quarter with $16.0 million in cash and equivalents.
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 $40,000 annually for these services. Full Disclaimer HERE.