VIQ Solutions Inc. (NASDAQ:VQS) Q4 2022 Earnings Call Transcript

Susan Sumner: Sure. I would say, Brian, that the new Queensland contract is probably at 90% efficiency right now. It gets better every single month. And as I referenced in my remarks, it was a long slog from July until now. And I think the teams have — it’s been a combination of both our internal adoption of their technology and some technical issues that the courts actually had on their end. And I think we’re at full stride. I think that we will be fully up to what I would call business as usual by early May. But we’re doing really well now. In terms of the execution of the bookings from 2022, it’s been a slower-than-anticipated onboarding process because of the constraints that I referenced also in my speaking notes, but we are starting to see the implementation and the ramping of the 2 major contracts that came out of 2022. And we expect that by June, those contracts will be fully onboarded.

Sebastien Pare: At scale.

Brian Kinstlinger: And just to be clear, when you’re talking about 90% efficiency on Queensland, does that mean all the volume’s going through, but you’re not as efficient as you can be? Or does that mean that you’re only doing 90% roughly of the volume that you could possibly do?

Susan Sumner: No. We’re doing all of the volume that we can possibly be. Actually, our volumes are accelerating pretty quickly. We’re at all the volumes that we are allocated through that contract. I’m talking about the efficiency rates from the internal teams that have affected our cost structures around that.

Brian Kinstlinger: Right. Okay. And then the first quarter is typically seasonally light. I believe it’s in Australia, that is the reason as some courts shut down. Again, I could be mistaken on my geographies in my memory.

Sebastien Pare: No, you’re correct.

Brian Kinstlinger: If the first quarter is down, should we think about it as seasonally weak compared to the fourth quarter? Or should we think about that fourth quarter missed some revenue, and those seasonality versus oncoming revenue may offset each other?

Sebastien Pare: The first quarter is the highest in terms of the seasonality impact. You’re absolutely correct, basically, 95% of the courts will shut down between Christmas and the end of January. So obviously, we plan for this. It’s been like that forever. And then those contracts starts really going back to normal capacity in February and March. So Alexie, I don’t know if you want to — I think from a model perspective, what to expect?

Alexie Edwards: I think it’s — Brian, as Seb alluded to, right? I mean, the courts are shut down for most of January. And Q1 is going to be within the same range, I would say, as Q4 or slightly better, based on all seasonality trends. That’s how we view it.

Brian Kinstlinger: Great. My other question is, with the — we obviously see the balance sheet at the end of the fourth quarter, and you discussed subsequent events. I guess I just want to make sure. How much of the — I think it was — I forget the number, $13 million or $15 million that you took, is used to offset, pay down the other debt? Or have you taken $12 more million that’s sitting as cash on the balance sheet? I’m just trying to understand what cash looks like, where you are roughly today.

Alexie Edwards: Yes. So we draw down $12 million as an initial advance. Most of that was used to liquidate the Crown debt of about approximately $8 million. Plus, we paid fees associated with the financing, and the balance is being absorbed in business — additional working capital. It’s too early. We haven’t finalized the March numbers. So at this point, we cannot provide an actual cash update in terms of where the balance sits. But the $12 million was — most of it was utilized to pay down the Crown debt and some fees associated with it, and the balance was absorbed for working capital.