VIQ Solutions Inc.

Ladies and gentlemen, and welcome to VIQ Solutions' 2035 second quarter release 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 touchstone phone. For questions and answers regarding recent disclosures or any other matter, please reach out directly to the company using the contact details on the company website. Your host for today is Audrey Luz, Corporate Finance Controller for VIQ. 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 security 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. fueled 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. Specifically, Q2 also marked a milestone in SaaS adoption. In June, we signed our largest SaaS contract to date. The new deployment will see VIQ's NetSky platform implemented across nine judicial districts and 22 counties in the U.S. Midwest, following a successful pilot earlier this year. This agreement validates the maturity and scalability of our NetSky platform, which is engineered for high-volume, high-compliance environments. Operationally, Australia, which represents approximately 55% of our total revenue, has seen its highest level of workforce flexibility and efficiency to date. The adoption of desk drives and first drives continues to streamline production costs and shorten turnaround times, contributing to sustained market 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 virtual AI solutions, purpose-built for regulated sectors such as justice, law enforcement, insurance, and governance. 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 digitalization, pharmacy and office automation, and global quality assurance standardization. These enhancements are improving scalability and productivity. With our AI-first platform, disciplined execution, and growing fast penetration, VIQ is positioned for sustainable margin expansion, recurring revenue growth, and long-term value creation. Now, let me recap our Q2's 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. Q2 2025 growth profit percentage rose to 48% from 45.5% for the same comparative period, dated 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, $0.3 million higher than same comparable period in 2024, driven mainly by the impact of foreign exchange. Adjusted operation loss of $0.8 million, $0.2 million declined from the same comparable 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. to improve adjusted EBITDA and working capital management. Now moving on to our H125 financial highlights. Revenue was 20 million, a 7% yearly decline given by the decreased volume and negative foreign exchange impact. Growth target percentage rose to 50% from 45% from the same comparative period due to operational deficiencies. SP&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 compounded period in 2024. And adjusted operating loss of $1.5 million a 0.9 zillion improvement from the same comparative period. In H1 2025, the company generated 1 million in positive cash flow from operations. We are very excited about the clear trends we have established on growth margin increases year-over-year. Growth margin expansion is a critical element in our goal of reaching free cash flow during fiscal 2025. By expanding growth margins, the company aims to see sustainable operations and free cap flow in 2025 and beyond. We look forward to sharing our future results in November. For any follow-up questions, please do not hesitate to contact us using the details on our website.