VQSLF: New Silos Expand Addressable Market

By M. Marin

OTC:VQSLF

READ THE FULL VQSLF RESEARCH REPORT

VIQ Solutions VQSLF recently reported 4Q19 and full year 2019 results. Revenue came in at $25.1 million for the year, up 119% year-over-year and in-line with our $25.3 million forecast. Importantly, some 90%, or $22.6 million, was recurring revenue.

Consistent with recent trends and management's goals, the 2019 gross margin widened. It was 43%, or $10.8 million, versus 31% in 2018. Management expects margins will continue to expand as customers migrate to the technology platform, reflecting competitive advantages such as AI functionality and that it is cyber-secure and compliant with data sovereignty regulations.

The acquisitions of ASC Services and ZWord are expected to add a combined roughly $12 million in annual revenue, but they did not contribute to 2020 aggregate revenue until February. These new companies are also expected to add new clients including several in media. Media represents a new silo for VIQ. Expanding into new silos is another element of VIQ's expansion strategy. ASC Services' clients include ABC, CBS, Bloomberg, CNN and Fox News, among other media outlets. With the media sector, and potentially other new target markets, the company believes it has expanded its addressable market.

VIQ estimates that 1Q20 revenue will range from $7.0 million to $7.5 million, which includes some revenue from Wordz and ASC but because these transactions closed in February, 2Q20 will be the first quarter of full integration. An active M&A pipeline could lead to additional transactions in in 2020-21, according to management, plus the company is building an order backlog as it expands its footprint and service offerings.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

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.