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Quisitive Technology Solutions Inc. Reports Fiscal 2020 Second Quarter Results

·12 min read

TORONTO, Aug. 26, 2020 /PRNewswire/ -- Quisitive Technology Solutions Inc. ("Quisitive" or the "Corporation") (TSXV: QUIS), a premier Microsoft solutions provider, has achieved quarterly revenue of $13.1 million or 222% year-over-year growth while driving adjusted EBITDA of $2.8 million or 21% of revenue for the second quarter ended June 30, 2020.

Quisitive Logo (PRNewsfoto/Quisitive Technology Solutions )
Quisitive Logo (PRNewsfoto/Quisitive Technology Solutions )

"We experienced tremendous growth in Q2, which was fueled by the momentum behind our Q1 acquisition of Menlo Technologies, organic growth in our cloud solutions business, and the launch of our payments intelligence solution, LedgerPay," said Mike Reinhart, Chief Executive Officer of Quisitive. "In Q2, we also achieved advanced specialization with Microsoft for the modernization of web applications in Azure. This recognition has led to increased visibility within Microsoft's ecosystem and grown our enterprise customer engagements, helping them further leverage the cloud and compete with innovative digital solutions in these unprecedented times."

FY2020 Q2 Financial Results:

The Corporation's unaudited financial statements for the quarter ended June 30, 2020 and related management's discussion and analysis can be found on the Corporation's website and on the Corporation's issuer profile on SEDAR at www.sedar.com. All figures are expressed in United States dollars unless otherwise stated.

  • Revenue for the quarter ended June 30, 2020 was $13.1 million versus $4.1 million for the quarter ended June 30, 2019.

  • Gross profit for the quarter ended June 30, 2020 was $5.6 million as compared to $1.7 million for the quarter ended June 30, 2019.

  • Adjusted EBITDA for the quarter ended June 30, 2020 was $2.8 million or 21% of revenue as compared to an Adjusted EBITDA of $0.3 million or 6% of revenue for the three months ended June 30, 2019.

  • Net loss for the quarter ended June 30, 2020 was $5.8 million or a loss of $0.05 per share. Included in the net loss was:

FY2020 Q2 Business Highlights:

"I deeply appreciate the dedication shown to our customers by the Quisitive leadership team and employees," added Reinhart. "They have continued to remain focused on helping our clients successfully navigate this challenging time. The commitment across the entire organization has enabled us to make a tremendous impact for our customers in Q2 and produce exceptional financial results as we all manage the impact of the pandemic. With a strong cash position, a robust pipeline, and a solid start to Q3, we are well positioned to continue executing against our multi-pronged growth strategy that involves supplementing our core cloud-based business with strategic M&A and partnership opportunities."

  • Completed a bought deal financing raising gross proceeds of C$16 million to enable growth through future acquisitions, investments in sales initiatives, marketing of intellectual property offerings, and other general corporate purposes.

  • The Company continues the market advancement of the LedgerPay solution platform and excited to recognize LedgerPay's revenue contribution in the quarter.

  • Recognized by Microsoft for achieving the Advanced Specialization certification in Modernizing Web Applications. Only 19 Microsoft partners worldwide have achieved this certification by passing a rigorous audit process.

  • Won and delivered a project with Inform Diagnostics, a subspecialty anatomic pathology provider, to build a mobile application to track case status for COVID-19 testing and anatomical pathology specimens.

  • Won and delivered an Azure Data and Analytics project for Massanutten Resorts, resulting in a published case study highlighting the success of the project.

  • The Corporation won their first large Microsoft Azure migration in the State and Local Government sector.

  • As a result of a proof-of-concept executed in 2019, won the follow-on project of the development of a consumer application that analyzes a golfer's putting stroke for a major golf equipment manufacturer.

  • Chosen to implement an integrated Dynamics CE and Dynamics Business Central Platform for a large Crown corporation.

Conference Call

Quisitive's executive management team will host a conference call to discuss the Corporation's financial results at 8:30 a.m. Eastern time on Thursday, August 27, 2020.

To access the conference call by phone, please dial the following numbers:

Canada/United States: 1-800-319-4610
Toronto Toll: 1-416-915-3239

Please call the conference dial-in approximately 10 minutes beforehand and ask to join the Quisitive Technology Solutions earnings call. A replay of the conference call will be available following the call at https://quisitive.com/investor-relations/.

Corporate Matters

The Corporation has issued 12,071,428 common shares pursuant to the exercise of common share purchase warrants at a price of C$0.35 per share, which were originally issued as partial consideration for the acquisition of Corporate Renaissance Group Inc. ("CRG"), and paid $1.8 million to retire the purchase price note due to a related party of $4.8 million. In addition, and as part of the settlement, the remaining 7,428,572 common share warrants that were issued in connection with the acquisition of CRG were forfeited by the former vendors of CRG. The Corporation also paid US$0.6 million to retire the working capital note from a related party.

"We believe that forfeiture of 7.4 million in potential warrant dilution along with retirement of over $5 million in debt using this combination of common shares and cash minimizes dilution while improving our balance sheet and overall liquidity position," said Michael Murphy, Chief Financial Officer of Quisitive.

"We are excited to exercise our warrants as we continue to have strong belief in the Quisitive strategy and compelling future growth opportunity," said Vijay Jog, President of Quisitive's Business Applications team, former owner of CRG.

The TSX Venture Exchange and the Corporation's board of directors have approved an increase to the number of awards available for issuance or grant under the Corporation's Stock and Incentive Plan that exercisable into common shares from 8,483,101 to 18,063,338, representing, at the date hereof, 10% of current issued and the outstanding common shares of the Corporation.

About Quisitive:

Quisitive is a premier Microsoft solutions provider that helps enterprise organizations move, operate, and innovate in the Microsoft cloud: Microsoft Azure, Microsoft Dynamics and Microsoft 365. Quisitive also provides proprietary Software as a Service ("SaaS") solutions such as CRG emPerform™ and Quisitive LedgerPay that complement the Microsoft platform. Quisitive serves clients globally with offices in Austin, TX; Dallas, TX; Denver, CO; Minneapolis, MN; Los Altos, CA; Washington, DC; Ottawa, ON; Toronto, ON and Hyderabad, India. For more information, visit www.Quisitive.com. TSXV: QUIS.

Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenue

Financial Measures and Adjusted EBITDA

There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles) is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

We prepare and release quarterly unaudited and annual audited financial statements prepared in accordance with IFRS. We also disclose and discuss certain non-GAAP financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls as a complement to results provided in accordance with IFRS. We believe that current shareholders and potential investors in our Corporation use non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues, in making investment decisions about our Corporation and measuring our operational results.

The term "Adjusted EBITDA" refers to a financial measure that we define as earnings before certain charges that management considers to be non-operating expenses and which consist of interest, taxes, depreciation, amortization, stock-based compensation (for which we include related fees and taxes), changes in fair value of derivatives, acquisition-related expenses and listing expense. Adjusted EBITDA as a percentage of revenues divides Adjusted EBITDA for a period by the revenues for the corresponding period and expresses the quotient as a percentage.

Management considers these non-operating expenses to be outside the scope of Quisitive' ongoing operations and the related expenses are not used by management to measure operations. Accordingly, these expenses are excluded from Adjusted EBITDA, which we reference to both measure our operations and as a basis of comparison of our operations from period-to-period.

Management believes that investors and financial analysts measure our business on the same basis, and we are providing the Adjusted EBITDA financial metric to assist in this evaluation and to provide a higher level of transparency into how we measure our own business. However, Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues are non-GAAP financial measures and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues should not be construed as a substitute for net income determined in accordance with IFRS or other non-GAAP measures that may be used by other companies, such as EBITDA. The use of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues does have limitations. As these acquisition-related expenses charges may continue as we pursue our consolidation strategy, some investors may consider these charges and expenses as a recurring part of operations rather than expenses that are not part of operations.

Cautionary Note Regarding Forward Looking Information

Neither TSX Venture Exchange nor its Regulation Services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements: Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, consolidation strategy and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others the limited history of operations, lack of profitability, availability of financing, the need for additional financing and the timing and amount of expenditures, information pertaining to strategy, plans, or future financial performance, such as statements with respect to future revenues, EBITDA, cash flows and other statements that express management's expectations or estimates of future performance, the anticipated timing of future cash flow and positive EBITDA, ability to successfully execute on consolidation strategies, the failure to find economically viable acquisition targets, funding for internally developed technology solutions, client retention and attrition, client demands, reliance on key personnel, economic spending in the IT industry and technological changes in the IT industry.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Corporation at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: changes in technology, customer markets and demand for the Corporation's services; the efficacy of the Corporation's software and product offering; sales and margin risk; acquisition and integration risks; dependence on economic and market conditions including, but not limited to, access to equity or debt capital on favourable terms if required; changes in market dynamics including business relationships and competition; information system risks; risks associated with the introduction of new products; product design risk; risks related to the Corporation being a holding company; environmental risks; customer and vendor risks; credit risks; tax and insurance related risks; risks of legislative changes; risks relating to remote operations; key executive risk; risk of litigation risks; risks related to contracts with third party service providers; risks related to the enforceability of contracts; risks related to general economic, market and business conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic; the limited operating history of the Corporation; reliance on the expertise and judgment of senior management of the Corporation; risks related to proprietary intellectual property and potential infringement by third parties; risks relating to financing activities including leverage; risks relating to the management of growth; increased costs associated with the Corporation becoming a publicly traded company; increasing competition in the industry; risks relating to energy costs; reliance on key inputs, suppliers and skilled labour; cyber-security risks; risks related to quantifying the Corporation's target market; risks related to industry growth and consolidation; fraudulent activity by employees, contractors and consultants; conflicts of interest; risks related to the cost structures of certain projects; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of Canada; risks related to future dispositions; sales by existing shareholders; the limited market for securities of the Corporation; price volatility of the common shares of the Corporation; no guarantee regarding use of available funds; currency fluctuations; and those factors described under the heading "Risks Factors" in the company's annual information form dated May 15, 2020 available on SEDAR. Although the forward-looking statements contained in this news release are based upon what management of the company believes, or believed at the time, to be reasonable assumptions, the company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Corporation does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

SOURCE Quisitive Technology Solutions Inc.