Company achieved record customer expansion
sales, along with solid revenue growth and margin expansion
Q4 Inc. (TSX:QFOR) (“Q4” or the “Company”), a leading capital
markets communications platform, today announced its financial
results for the three month period ended March 31, 2022. All
amounts are expressed in US dollars unless otherwise stated.
“Our performance for the first quarter highlights the durability
and agility of our business model,” said Darrell Heaps, CEO of Q4.
“While top line and bottom line results were in line with our
expectations, we were especially excited to see the record increase
in customer expansion sales and controllable client retention. We
believe this demonstrates our ability to provide our clients with a
growing number of valuable solutions and services, and is directly
correlated to our investments in our technology platform, as well
as our focused effort of selling into our established customer
base. Looking out to the second half of the year, we would expect
material investments to tail off, and to realize greater leverage
and accelerating revenue growth as we execute on our growth and
path to profitability strategy.”
First Quarter 2022 Financial Highlights
- Delivered revenue of $13.9 million, an increase of 23.1% from
the comparative period in the prior year
- Drove annual recurring revenue1 as of March 31, 2022 to $52.8
million, increasing 18.1% year over year
- Average recurring revenue per account (ARPA) grew 3.2% for the
quarter, an increase of 12.2% over the preceding quarter's ARPA
growth rate of 2.8%
- Expanded gross margin by 300 basis points year over year to
57.4%
- Net loss of $6.6 million, or $0.17 per share
- Adjusted EBITDA2 loss of $7.1 million
First Quarter and Subsequent to Quarter-End Operational
Highlights
- Completed Q1 with 2,673 total customers (including customers in
the Company’s backlog) compared to 2,391 customers from the prior
year period
- Increased the number of products existing customers are using,
driving growth in ARPA
- The migration of our corporate earnings webcasting platform
continued on plan, with the company delivering 734 earnings events
year to date, and over 1000 earnings events in total, since
launching the platform
- Continued expansion of Capital Markets Events business to
include hybrid and in-person capabilities in addition to fully
virtual, resulting in the growth of Q4- hosted sell-side investor
conferences and bus tours
- Launched Video Earnings product and expanded set of features to
our Virtual Investor Day product
- Signed 3-year extension with New York Stock Exchange and their
new expanded issuer services program, offering a broad list of
virtual events that go beyond quarterly earnings calls, including
but not limited to investor days, ESG events, corporate town halls,
and partnering with the NYSE to host in-person events at the
Exchange with the benefit of video broadcasting
- Announced Normal Course Issuer Bid on March 23rd to provide us
with the flexibility to repurchase stock based on management’s
ongoing assessments of the capital needs of the business, the
market price of Q4’s common stock and general market
conditions
Webcast Information
Q4 will host a webcast with Darrell Heaps, CEO, Ryan Levenberg,
exiting CFO and Interim CFO Donna de Winter, to discuss the
Company's financial results at 9:30 am ET on Wednesday, May 4,
2022. Participants can register in advance or access the webcast
live at https://events.q4inc.com/attendee/251269858. Supplemental
materials will be available at least fifteen minutes prior to the
start of the event. A replay of the webcast will be available at
investors.q4inc.com shortly after the event concludes.
Audience questions will be taken real-time via the Q4 Platform.
Investors can also submit their questions in advance to
ir@q4inc.com or via our IR website. We will do our best to respond
to your questions either on the webcast, if time permits or shortly
thereafter. We appreciate your interest.
Q4's unaudited interim condensed consolidated financial
statements and management's discussion and analysis for the three
month period ended March 31, 2022 will be available on Q4's IR
website and will be filed on SEDAR at www.sedar.com.
First Quarter 2022 Results
Selected Financial Measures
Revenue
Three Months Ended March
31,
2022
2021
Change
Change
(U.S. dollars in thousands)
$
$
$
%
Capital markets platform
12,864
10,598
2,266
21.4%
Platform services
1,063
719
344
47.8%
Other
18
8
10
Total revenue
13,945
11,325
2,620
23.1%
Gross profit
8,006
6,161
1,845
29.9%
Percentage of total revenue
57.4%
54.4%
Key Performance Indicators
March 31, 2022
March 31, 2021
Change
Change
(U.S. dollars, except ARR which is in
millions)
$
$
$
%
Annual Recurring Revenue
$
52.8
$
44.7
$
8.1
18.1
%
Average Revenue per Account
$
18,404
$
17,837
$
567
3.2
%
Results of Operations
The following table outlines our consolidated statement of loss
and comprehensive loss for the three months ended March 31, 2022
and 2021:
Three Months Ended
March 31,
2022
2021
(U.S. dollars in thousands)
$
$
Revenue
13,945
11,325
Direct cost of revenue
5,939
5,164
Gross profit
8,006
6,161
Operating Expenses
Sales and marketing
5,144
4,393
Research and development
4,130
2,840
General and administrative
5,771
4,983
Depreciation and amortization
901
1,066
Foreign exchange gain
(597)
(27)
Other expenses
280
221
Total operating expenses
15,629
13,476
Loss from operations
(7,623)
(7,315)
Finance expenses
21
131
Finance income
(3)
(1)
(Gain) loss on derivative financial
instruments
(1,104)
6,094
Loss before income taxes
(6,537)
(13,539)
Income taxes
60
(2)
Net loss
(6,597)
(13,537)
Other comprehensive loss
Foreign exchange loss on foreign
operations
(11)
(16)
Net loss and comprehensive loss
(6,608)
(13,553)
Basic and diluted loss per share
(0.17)
(1.46)
Weighted average number of common shares
outstanding - basic and diluted
39,624
9,252
Key Balance Sheet Information
March 31, 2022
December 31, 2021
Change
Change
(U.S. dollars in thousands)
$
$
$
%
Cash
55,827
63,283
$(7,456)
(11.8)%
Total assets
101,848
109,117
(7,269)
(6.7)%
Total liabilities
29,599
30,415
(816)
(2.7)%
Total long-term liabilities
8,370
8,065
305
3.8%
Non-IFRS Measures and Reconciliation of Non-IFRS
Measures
This press release makes reference to certain non-IFRS financial
measures including key performance indicators used by management
and typically used by our competitors with software-as-a-service
(“SaaS”) business models. These measures are not recognized
measures under IFRS and do not have a standardized meaning
prescribed by IFRS and are therefore not necessarily comparable to
similar measures presented by other companies. Rather, these
measures are provided as additional information to complement those
IFRS financial measures by providing further understanding of our
results of operations from management’s perspective. Accordingly,
these measures should not be considered in isolation nor as a
substitute for analysis of our financial information reported under
IFRS. These non-IFRS financial measures and industry metrics are
used to provide investors with supplemental measures of our
operating performance and liquidity and thus highlight trends in
our business that may not otherwise be apparent when relying solely
on IFRS financial measures. We also believe that securities
analysts, investors and other interested parties frequently use
non-IFRS financial measures and industry metrics, in the evaluation
of similar companies. Management also uses non-IFRS financial
measures and industry metrics in order to facilitate operating
performance comparisons from period to period, the preparation of
annual operating budgets and forecasts and to determine components
of executive compensation.
EBITDA and Adjusted EBITDA
We define EBITDA as net loss, adjusted for depreciation and
amortization, finance expenses, finance income and income taxes.
Adjusted EBITDA is a supplemental measure used by management to
assess our financial and operating performance without regards to
financing methods or capital structure. Adjusted EBITDA represents
EBITDA, adjusted for the following: share-based compensation,
unrealized foreign exchange (gain) loss, (gain) loss on derivative
financial instruments, and transaction related expenses. We believe
EBITDA and Adjusted EBITDA, two non-IFRS financial measures, are
useful in assessing our operating cash flows as they eliminate the
effects of non-cash expenses and one-time or non-recurring items
recorded in the statements of loss and comprehensive loss. The
Company’s definition of EBITDA and Adjusted EBITDA may be different
than similarly titled measures used by other companies. The
following table reconciles Adjusted EBITDA to net loss for the
periods indicated.
Three Months Ended
March 31,
2022
2021
(U.S. dollars in thousands)
$
$
Net loss
(6,597
)
(13,537
)
Depreciation and amortization
901
1,066
Finance expenses(1)
21
131
Finance income
(3
)
(1
)
Income taxes
60
(2
)
EBITDA
(5,618
)
(12,343
)
Other adjustments
Share-based compensation expense(2)
148
247
Unrealized foreign exchange (gain)
loss(3)
(597
)
54
(Gain) loss on derivative financial
instruments(4)
(1,104
)
6,094
Transaction related expenses(5)
22
366
Adjusted EBITDA
(7,149
)
(5,582
)
_____________________
Note:
(1)
Finance expenses are primarily related to
interest and accretion of financial liabilities.
(2)
Share-based compensation includes non-cash
expenditures recognized in connection with the issuance of options
under our Legacy Equity Incentive Plan to our employees and
directors. Options granted under the Legacy Equity Incentive Plan
have become options under our Omnibus Equity Incentive Plan (the
“Omnibus Plan”) in connection with the IPO in 2021. This amount
also includes the restricted share units ("RSUs") and performance
share units ("PSUs") granted under the Omnibus Plan.
(3)
These adjustments represent the change in
the value of foreign currency denominated transactions that are
recorded in financial statements prior to the settlement of
invoices.
(4)
These adjustments represent fair value
adjustments relating to outstanding warrants.
(5)
Transaction related expense represents
expenses relating to our IPO and include professional, legal,
consulting and accounting fees that are non-recurring and would
otherwise not have been incurred.
Free Cash Flow
Free cash flow represents cash flow from (used in) operating
activities less additions to property and equipment. We use Free
cash flow, a non-IFRS financial measure, to assess the amount of
cash available for dividend payments, debt repayment and other
investing and financing activities. We believe that this
information is useful to certain investors and analysts to evaluate
the Company’s performance with respect to its operating cash flow
capacity to meet non-discretionary outflows of cash. The following
tables reconciles our cash flow from (used in) operating activities
to Free cash flow:
Three Months Ended
March 31,
2022
2021
(U.S. dollars in thousands)
$
$
Cash flow from (used in) operating
activities
(7,592)
(4,416)
Additions to property and equipment
(279)
(161)
Free cash flow
(7,871)
(4,577)
Key Performance Indicators
This press release also makes reference to “Annual Recurring
Revenue” or “ARR” and “Average Revenue Per Account” or “ARPA”,
which are key performance indicators we use to help us evaluate our
business, measure our performance, identify trends affecting our
business, formulate business plans and make strategic decisions.
Our key performance indicators may be calculated in a manner
different from similar key performance indicators used by other
companies. Definitions of these key performance indicators can be
found under the heading “Key Performance Indicators” in the
Company’s management’s discussion and analysis for the three months
ended March 31, 2022 and 2021.
Forward-Looking Information
This press release may contain “forward-looking information”
within the meaning of applicable securities laws. Forward-looking
information may relate to our future financial outlook and
anticipated events or results and may include information regarding
our financial position, business operations, business strategy,
growth strategies, budgets, operations, financial results, taxes,
dividend policy, plans and objectives. In certain cases,
forward-looking statements that are predictive in nature, depend
upon or refer to future events or conditions, and/or can be
identified by the use of words such as “expect,” “continue,”
“anticipate,” “intend,” “aim,” “plan,” “believe,” “budget,”
“estimate,” “forecast,” “foresee,” “close to,” “target” or negative
versions thereof and similar expressions, and/or state that certain
actions, events or results “may,” “could,” “would,” “might” or
“will” be taken, occur or be achieved. In addition, any statements
that refer to expectations, intentions, projections or other
characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking
information are not historical facts but instead represent
management’s expectations, estimates and projections regarding
future events or circumstances.
Forward-looking information is based on our opinions, estimates
and assumptions in light of our experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors that we currently believe
are appropriate and reasonable in the circumstances. Despite a
careful process to prepare and review the forward-looking
information, there can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct.
Certain assumptions underlying the forward-looking information in
this MD&A include: our ability to continue investing in
infrastructure to support our growth and brand recognition; our
ability to continue maintaining and enhancing our technological
infrastructure and the functionality of our platform; our ability
to develop and implement new product offerings; our ability to
capitalize on growth opportunities and implement our growth
strategy; our ability to build our market share and enter new
geographies; the total addressable market for our products; our
ability to retain key personnel; our ability to maintain existing
customer relationships and to continue to expand our customers’ use
of our platform and products; our ability to maintain existing
relationships on similar terms with our current service providers,
suppliers, channel partners and other third parties; our ability to
maintain and expand our geographic scope; our ability to execute on
our expansion plans; our ability to obtain financing on acceptable
terms or at all; the impact of competition; the successful
integration of future acquisitions; the changes and trends in our
industry or the global economy; changes in laws, rules,
regulations, and global standards; and that the risks and
uncertainties noted below will not materialize.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as of the date such statements are made, are subject
to known and unknown risks, uncertainties, assumptions and other
factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to the following risk factors described in greater
detail in the “Summary of Factors Affecting our Performance” and
“Financial Instruments and Other Instruments” sections of this
MD&A, and in the “Risk Factors” section of our Annual
Information Form, which was filed on March 30, 2022, and is
available under our profile on SEDAR at www.sedar.com.
If any of these risks or uncertainties materialize, or if the
opinions, estimates or assumptions underlying the forward-looking
information prove incorrect, actual results or future events might
vary materially from those anticipated in the forward-looking
information. The opinions, estimates or assumptions referred to
above are described in greater detail in "Summary of Factors
Affecting our Performance" and should be considered carefully by
prospective investors.
Although we have attempted to identify important risk factors
that could cause actual results to differ materially from those
contained in forward-looking information, there may be other risk
factors not presently known to us or that we presently believe are
not material that could also cause actual results or future events
to differ materially from those expressed in such forward-looking
information. There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. No
forward-looking statement is a guarantee of future results.
Accordingly, you should not place undue reliance on forward-looking
information, which speaks only as of the date made. The
forward-looking information contained in this MD&A represents
our expectations as of the date of hereof (or as of the date they
are otherwise stated to be made), and is subject to change after
such date. However, we disclaim any intention or obligation or
undertaking to update or revise any forward-looking information
whether as a result of new information, future events or otherwise,
except as required under applicable securities laws.
Additional information relating to Q4, can be found on SEDAR
under the Company’s profile at www.sedar.com.
About Q4 Inc.
Q4 Inc. (TSX: QFOR) is a leading capital markets communications
platform that is transforming the way publicly traded companies,
investors and investment banks make decisions to efficiently
discover, communicate and engage with each other. The Q4 end-to-end
technology platform facilitates interactions across the capital
markets through its IR website products, virtual events solutions,
capital markets CRM, shareholder and market analytics tools. The
firm is a trusted partner to more than 2,673 public companies
globally including 50% of the S&P 500. Q4 is based in Toronto,
with offices in New York and London. Learn more at q4inc.com.
_____________________ 1 Annual recurring revenue or “ARR” is a
key performance indicator. See “Key Performance Indicators” 2
Adjusted EBITDA is a non-IFRS measure. See “Non-IFRS Measures and
Reconciliation of Non-IFRS Measures”
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504005282/en/
Investor Relations: Sara Pearson, ir@q4inc.com
Media Inquiries: Karen Greene, media@q4inc.com
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