VIQ Solutions Inc.

Good morning, ladies and gentlemen. My name is Chantelle, and I'll be your conference operator. Today we will be hosting a conference call to discuss the fourth quarter and full year 2021 Panetta results for VIQ Solutions Inc. At this time, all participants are in a listen-only mode. For those that dialed in, should you require any assistance during the call, please press star then zero on your touchtone phone. We will have a question and answer session at the end of the call. which time all participants wishing to ask a question will be instructed to press star 1 and identify themselves before asking a question. Please limit yourself to one or two questions so that others may have a chance to ask questions. You may re-enter the queue. Your host for today is Ms. Laura Kiernan, Head of Investor Relations for BIQ. Please go ahead.

Thank you, Chantal, and good morning, everyone, and welcome to VIQ Solutions' 2021 Fourth Quarter and Full Year Results Conference Call. Before we begin, I would like to point out that certain statements made on today's call contain forward-looking information subject to known and unknown risks, uncertainties, and other factors. For a complete discussion of the risks and uncertainties facing VIQ, we refer you to the company's MD&A and other continuous disclosure filings which are available on CDAR at cdar.com and sec.gov. As a reminder, all dollar amounts are in U.S. dollars unless otherwise stated. And with us today, we have Sebastian Paré, CEO, Alexi Edwards, our CFO, and Susan Sumner, our President, COO of the EIQ, all of whom will be available for questions following the prepared remarks. I will now turn the call over to Sebastian Paré to begin.

Thank you, Laura. Welcome everyone to our full year 2021 earnings call. The first order of business today is to congratulate and welcome Susan Sumner and Sheng Peng to the board of directors. Our chairman Larry Taylor stated that he was excited to announce the appointment of these two highly accomplished executives to our board and that Sheng's technology experience and leadership and strategic growth will contribute substantially to advancing our goals. and Susan's extensive operational and management experience in the global transcription industry, including VIQ for the last four years, adds meaningful perspective to our board. These appointments further our ability to scale globally and achieve our strategic growth plan. Each of these seasons professionals has an established record of accomplishment for executing strategies to build successful companies. They are the next step in our plan to expand the board experience and operational acumen matching the needs of our growing global enterprise. Now into our results. The past 12 months have been a remarkable journey for our company, our clients, our society, and for many of us personally. I am pleased to report that VIQ has not only persevered during one of the most challenging business environments on record, but was able to finish 2021 strong by completing many of our commitments in the areas of cloud infrastructures, cybersecurity, products, capital, and regulatory markets, as well as acquisitions that will allow us to scale and our financials to lift significantly throughout 2022. While 2021 was a challenging year, given the fluctuations of COVID recovery in our operating geographies, We have advanced our growth strategy and make extensive strides in overall operational performance. We're now ready to scale profitably to the next level. We have enhanced our capture to documentation offerings and expanded our client relationship by acquiring two key assets, including Offscript in Australia and the transcription agency, otherwise known as TTA in the UK. The strategic acquisitions are a foundation for future global growth in those regions. The pro forma annual recurring revenue for last year increased by 63% to $48.6 million USD from $29.7 million for the comparative period in 2020. This is a new baseline revenue that we're working with, with 2022 and beyond. Please note the ARR of $29.7 million is slightly below our total reported revenue of $31.75 million last year because some of the revenue was not recurring. A key intellectual property patent was obtained for artificial intelligence innovations that covers 10 unique aspects of our patent AI assist automated workflow and analysis platform. The technology productivity impact in insurance and law enforcement was demonstrated last year. In 2022, we expect to achieve productivity improvements in our core vertical, which will further increase the sustainability of our gross margin expansion. Also, during late 2021, we capitalized on our global labor capacity to lessen the impact of COVID and labor shortages in our operating regions. We did this by rethinking structurally how we utilize this asset while still providing our secure end-to-end solutions without compromising speed and accuracy of the content. For our two most recent acquisitions, our court segment is forecasted to represent 65% of our 2022 revenue globally, which is an increase from 34% in 2021. We expect most of our existing courts and media clients, as well as the ones gains from these two most recent acquisitions, will migrate into NetScribe platform, which is powered by AI assist over the course of 2022. The shift towards legal courts is expected to enable higher productivity and further gross margin expansion. Susan will get into a lot of those topics when she speaks. We also expect the shift in revenue towards Australia following the completion of the OSTRP acquisition with approximately 50% of our 2022 revenue derived from Australia versus 31% last year. Now I will hand it over to Alexi, who will provide a high-level overview of our financial results and goals for 2022. When he's finished, Susan will provide additional insight into our operating results. They will open up the lines for answering questions, and I'll come back to you for closing remarks. Alexis? Thank you, Sebastian, and good morning, good afternoon, and good evening to everyone. Rather than rehash the content published in our press release, I would like to make remarks on a few key highlights from our results last year and reaffirm our goals for 2022. We reported total revenue of $31 million in 2021, which decreased 2% versus the prior year. However, when compared to 2019 or the last year before the pandemic, we saw meaningful trends in revenue. For example, our U.S. revenue was only $14.5 million in 2019 but increased to $22.2 million in 2020 and declined to $19 million in 2021. The US decline in 2021 versus 2020 was driven by several factors, including some difficult comparisons. Our US meter revenue was significantly lower due to skewed year-over-year comparisons. During 2020, the company completed a large one-time archive project that was not repeated in 2021. also included additional volumes relating to the election cycle that weren't repeated in 2021. Combined with the COVID-19 impact on the traditional conference in business throughout the year, media, corporates, and government was negatively impacted in what has otherwise been a growth vertical through the addition of two major new broadcast clients in Q4 and a significant Q122 ramp-up by our largest media client in financial earnings work. Lower U.S. insurance claims in 2021 attributed to slower U.S. recovery in car accident claims due to reduced movement of people and traffic from the lockdown and decreased local policing activities from government mandated lockdowns in various states and local communities. These resulted in lower volumes of insurance recorded statements, police interviews, and transcription revenue in insurance and law enforcement segments. In Australia, Our revenue went from about $9 million in 2019 to $8.5 million in 2020 and was about $9.5 in 2021. In Australia, our growth was hampered and revenues were deferred as a result of having 163 billion days that were negatively impacted by COVID-19 lockdowns during 2021. And these factors are partially offset by, one, acquisition-related revenue in UK and Australia, which contributed about $900,000 to the year, and adoption of first draft technology. Please note, the late December close of OSCQIP was tied to the delayed clearance by the Australian Competitive Bureau, and subsequently had an estimated $2 million impact on planned revenues versus reported results. We expect that U.S., Australia, and U.K. revenues to normalize in 2022, including the acquisitions. Now on to our gross margin. Our gross profit of $14.9 million was 48% of revenue versus 51% for the same period in 2020. The decrease in gross profit was primarily due to the reduction of COVID-19 wage subsidies and delayed revenue resulting from the pandemic. Excluding the COVID-19 wage subsidies impact, gross margin for the full year would be 46% compared to 42% for the full year 2020, representing an increase of approximately 395 basis points. Please note that we have referenced the gross margin excluding subsidies on the presentation. Driving the increase of about 4 percentage points in gross margin excluding the impact of COVID-19 wage subsidies this past year were the following factors. One, the migration of technology services, particularly in the insurance and law enforcement verticals. Two, proven labor force efficiency gains from the implementation of NETSCRIBE and AISX technologies enabled a reduction in rates paid per unit of production for certain segments. The migration to a global labor force to better utilize access to labor across VIQ entities. Fourthly, the stabilization of the labor force in the U.S. post-COVID-19 reducing requirements for bonus payments to incentivize the contract labor. Fifthly, we believe the shift towards legal or courts will be a driver of improvements planned for next year. And finally, the company expects to continue to trend further towards predictable, recurring, higher margin revenue as first draft is adopted and more clients leverage higher margin machine drafts. We have reaffirmed our goals for 2022. Our financial expectations include generating at least $50 million in revenue, while gross margin expected to be between 47% to 55%. As Sebastian mentioned, our pro-form annual recurring revenue rate at the end of last year was about $49 million. When you include a full year of 2021 base recurring revenue and TTA and OSCQIP acquired analyzed revenue of approximately $14 million and a major court contract of approximately $6 million, which effectively began in December 2021 upon the close of the OSCQIP acquisition. This really means that we're at least $50 million in revenue for this year is achievable, almost with no additional organic growth. We do expect to pursue additional organic growth, especially in light of the recovery following the real meaning of the economy as COVID-19 restrictions subside. We're allocating capital towards the highest and best use, including acquisitions, organic growth drivers such as investment in technology, sales and marketing, and infrastructure development. The company's capital allocation is centered on generating organic growth, investment in technologies, mergers and acquisitions, and balance sheet deleveraging. Our goal with capital allocation is to increase the earning power of the company and reinvest the free cash flow of the business to generate more cash. We plan to demonstrate to our shareholders that flywheel post-pandemic started in Q2 throughout 22 with a key priority being using cash to pay down debt. In the last five annual reports, we have demonstrated incremental increases in gross margin and revenue. While results may appear lumpy in the last two years due to the societal disruptions from the pandemic, that incremental progression over time is moving in a very solid direction. No, I'd like to turn it over to Susan.