On Tuesday, VIQ Solutions reported its Q3, 2017 results. The company earned (U.S.) $77,018 on revenue of $3.2-million, a topline that was up 45 per cent over the same period last year.
“We are pleased to report a third consecutive profitable quarter along with continued strong growth in top-line revenue,” said CEO Sebastien Pare. “Profit and revenue performance in Q3 are a direct result of our market diversification; CyberCrypt, the best-in-class [software-as-a-service] cybersecurity for digital evidence and sensitive content; growth from existing customers in the [Europe, Middle East and Africa], Australia and U.S.; and from some customers upgrading to the latest platform to take advantage of new products and services including VIQ’s upcoming aiAssist. The company anticipates continued strong growth through a blend of new and organic growth in recurring revenue for 2017 and beyond as pilots in our pipeline continue to increase steadily via a growing ecosystem of strategic partners worldwide. Two new breakthrough products are nearing commercial launch in 2018, paving the way for aiAssist demand in the second part of 2018. The positive financial and business results build on the momentum of the last three quarters and reflect VIQ’s international footprint and growing market demand for ultrasecure digital evidenced and next generation analytics. ”
Garcea notes that the company revenue and earnings matched his model exactly, as did EBITDA, which came in at $400,000. The analyst summarized the quarter.
“VQS reported revenue of $3.2M (EWP: $3.2M), EBITDA of $0.4M (EWP: $0.4M), and EPS of $0.00 (EWP: $0.00). Gross margin was 43.5% versus our 42.0% estimate. Recurring revenue comprised 77% of total versus 69% q/q, and grew 30% y/y. Cash ended the quarter flat at $0.9M q/q, due to a robust working capital build – CFOPS (excluding working capital) was $77K. VIQ anticipates several digitization of evidence collection, workflow and collaboration pilots to convert to full rollouts thru 2018 in the verticals of public safety, medical, and justice. The Company expects continued strong growth in recurring revenues for the balance of 2017 and beyond, with growth coming from the areas of cybersecurity, digital workflow, and artificial intelligence. Just last week the Company closed a private placement offering of C$4.9M to finance the accelerated growth of its innovative aiAssist product. Its CyberCrypt product is in the midst of several enterprise rollouts and we expect this to have a more meaningful impact on results in 2018.
In a research update to clients Tuesday, Garcea maintained his “Speculative Buy” rating and one-year price target of $0.50 on VIQ Solutions, implying a return of 72 per cent at the time of publication.
Garcea thinks VIQ will generate Adjusted EBITDA of $1.6-million on revenue of $13.1-million in fiscal 2017. He expects those numbers will improve to EBITDA of $2.6-million on a topline of $17.6-million the following year.