VIQ Solutions Inc.

Good day, ladies and gentlemen, and welcome to BIQ Solutions' 2035 Second Quarter Earnings Conference Call. Currently, 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. For questions and answers regarding recent disclosures or any other matter, please reach out directly to the company using the details on the company website. Your host for today is Audrey Liu, Corporate Finance Controller for BIQ. Please go ahead.

Thank you. Before we begin, please note that certain statements made on today's calls are forward-looking within the meaning of applicable securities laws. These statements involve risks and uncertainties that may cause actual results to differ materially. Please refer to the forward-looking statements section in our press release and the company's filings on cdarplus.ca. As a reminder, all dollar amounts are in U.S. dollars unless otherwise stated. With us today is Alexi Edwards, Chief Financial Officer. With that, I will now turn the call over to Alexi.

Thank you, Audrey, and good morning, everyone. We entered 2025 with sustained momentum following a record fiscal 2024, during which we delivered a $6 million year-over-year improvement in adjusted EBITDA and expanded growth margin. That trajectory continued through the first half of 2025. Fuel by disciplined execution of our automation-first strategy, operational efficiencies, and growing adoption of our AI-powered SaaS solutions. Q2-25 marked our fifth consecutive quarter of positive adjusted EBITDA, approximately $1 million, up 24% year-over-year, and gross margin expansion to 48%. compared to 45.5% in Q2 2024. For the first half of the year, growth margin was nearly 50% up from 44.9% in the same period last year, demonstrating scalability and operating leverage of our AI-driven platform. Strategically, Q2 also marked a milestone in SaaS adoption. In June, we signed our largest SAS contract to date. The new deployment will see VIQ's NETSCRIBE platform implemented across nine judicial districts and 22 counties in the US Midwest, following a successful pilot earlier this year. This agreement validates the maturity and scalability of our NETSCRIBE platform, which is engineered for high-volume, high-compliance environments. Operationally, Australia, which represents approximately 55% of our total revenue, achieved its highest level of workforce flexibility and efficiency to date. The adoption of Describe and FirstDraft continues to streamline production costs and shorten turnaround times, contributing to sustained margin improvement in the UK and North America, regions, both regions consistently deliver gross margins above 60%, underscoring the scalability of our platform. During the first half of 2025, we secured $1.85 million in net new bookings, including $280,000 in SaaS and software sales, reflecting increasing market demand for vertical AI solutions purpose-built for regulated sectors such as justice, law enforcement, insurance, and government. Our ongoing cost optimization launch in 2024 is delivering measurable results. We have streamlined our operating structure while countering targeted R&D investments in automation, advanced variations, automation, and global quality assurance standardization. These enhancements are improving scalability and productivity. With our AI-first platforms, disciplined execution, and growing SaaS penetration, VIQ is positioned for sustainable margin expansion, recurring revenue growth, and long-term value of creation. Now, let me recap our Q2 25 financial highlights. Revenue for the quarter was $10.4 million, a 10% year-over-year decline, driven mainly by decreased volumes and negative foreign exchange impact. Q225 gross profit percentage rose to 48% from 45.5% for the same comparative period aided by operational efficiencies. SG&A declined 11%, reflecting organizational restructuring and disciplined expense management. Adjusted EBITDA was approximately 1 million up from adjusted EBITDA of approximately 800,000 in Q2 2024. Net loss was 0.9 million, 8.3 million higher than same comparable period in 2024, driven mainly by the impact of foreign exchange. Adjusted operating loss of 0.8 million, 0.2 million declined from the same comparative period due mainly to the impact of foreign exchange. We ended the quarter with $1.1 million in cash, generating 0.3 million in positive cash flow from operations, thanks to improved adjusted EBITDA and working capital management. Now, moving on to our H125 financial highlights. Revenue was 20 million, a 7% year-over-year decline, driven by the decreased volumes and negative foreign exchange impact. Gross profit percentage rose to 50% from 45% from the same comparative period due to operational deficiencies. SG&A declined 11%, reflecting organizational restructuring and disciplined expense management. And adjusted EBITDA was approximately 1.8 million, up from adjusted EBITDA of approximately 700,000 in prior year. Net loss was 2.8 million, 8.4 million higher than same comparative period in 2024. An adjusted operating loss of 1.5 million, 8.9 million improvement from the same comparative period. In H1 2025, the company generated 1 million in positive cash flow from operations. We're very excited about the clear trends we have established on gross margin increases year over year. Gross margin expansion is a critical element in our goal of reaching free cash flow during fiscal 2025. By expanding gross margins, the company aims to achieve sustainable operations and free cash flow in 2025 and beyond. We look forward to sharing our Q3 results in November. For any follow-up questions, please do not hesitate to contact us using the details on our website.

Thank you. This concludes today's call. You may now disconnect.