Morning, ladies and gentlemen. My name is Brent, and I will be your conference operator. Today, we are hosting a conference call to discuss the fourth quarter and full year 2022 financial results for VIQ Solutions Inc. At this time, all participants are in a listen-only mode. For those that have dialed in, should you require any assistance during the call, please press star then zero on your touch-tone phone. We will have a question and answer session at the end of the call, at which time all participants wishing to ask a question will be instructed to press star one prior to asking a question. Please limit yourself to one question so that others may have a chance to ask. Your host for today is Ms. Laura Kiernan, Head of Investor Relations for VIQ. Please go ahead.
Thank you, Brent. Good morning, everyone, and welcome to our 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 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 SEDAR at sedar.com and on sec.gov. As a reminder, all dollar amounts are in US dollars unless otherwise stated. With us today, we have Sébastien Paré, CEO; Alexie Edwards, CFO; and Susan Sumner, President and Chief Operating Officer of VIQ, all of whom will be available for questions following the prepared remarks. I will now turn the call over to Sébastien Paré to begin.
Thank you, Laura. Welcome, everyone, to our 2022 4th quarter and full year earnings call. I'll provide some high-level remarks on our results, and then I'll hand it over to Susan, who will discuss our operating results, who will then be followed by Alexie, who will discuss our financial results briefly. We will open up the call for questions. Into our results. 2022 was an exceptionally tough year for the industry and for VIQ. We continued to work our way through the post-pandemic Great Resignation, rising interest rates and inflation, currency impact, and a tech sector that saw the worst performance in the public markets since the global financial crisis 15 years ago. We spent a year focused on improving our P&L and productivity while driving operational excellence and automation across the business.
The migration of our clients and transcription teams to NetScribe, powered by aiAssist, was a key objective to increase efficiency and to right-size our global headcount while boosting productivity. We ended up 2022 with a 48% increase in year-over-year revenue, of which 93% is annual recurring revenue, known as ARR, and a 53% increase year-over-year in our net new bookings. Net new bookings are an early indicator of organic growth as the main driver for 2023. We delivered on our promise to bring end-to-end workflow technologies to clients around the globe to solve key problems like the critical shortage of court reporters in courts, the demand to manage and access the vast amount of data that is recorded, and the need to move content securely to the cloud.
As our customers find more efficient ways to create and digitize their evidentiary content, we continue to execute on our strategy to extend our AI to targeted verticals through scale, industry-specific content, optimized workflow, and human knowledge. The automation of multi-speaker transcription is a challenging work and requires fine-tuning an elevated human task to bolster accuracy and usability for clients who rely on the accuracy of the spoken word for decision-making. With the continual advancements in natural language models from large global speech-to-text companies, it's reliant upon technology service experts like VIQ to lead the implementation of these technologies to shape the transcription industry in core verticals like legal, courts, criminal justice, insurance, and media. Successful verticalization requires scale, specialized data, industry-specific workflow, and unsurpassed human knowledge, which is at the core of VIQ.
I will now pass the call over to Susan to discuss the operating results in greater details. Over to you, Susan.
Thanks, Seb. As Seb stated, 2022 was a challenging year. Strength and growth comes only through continuous effort and perseverance. We have become laser-focused on performance, productivity, measurement, and accountability of all of our teams. I am pleased with how we are improving our execution related to client migration, the utilization of our global workforce, our new global sales footprint, and the creation of new innovations that drive our customer success. The positive impact our AI-powered NetScribe technology has had in our most mature markets is impressive. Global margins post-migration reached 55.8% in the U.S. and 61.6% in the U.K. This is a material improvement from the growth margin ranges noted post-acquisition.
Australia, representing 57% of our revenue going into 2023, is scheduled to complete these migrations going onto the platform in late 2023, which will further improve the margins. The key attainments in productivity and efficiency gains have positioned us for success with the Australian migrations, where we expect to continue driving significant momentum as we experienced in the fourth quarter. We ended 2022 with an increase of 48% in year-over-year revenue and a 53% increase in year-over-year net bookings. Unfortunately, a significant portion of anticipated revenue in Q3 and Q4 was delayed due to the Great Resignation, constraining capacity, slowing the onboarding of our bookings, and delaying migrations that would have driven further improvements on gross margin.
The second half of 2022 was focused on stabilizing key customers. We succeeded in renewing or extending all of our major contracts that were up for renewal in 2022 and maintaining an NPS score in the mid-90s. While our industry was hit hard, we were able to persevere and preserve critical relationships across all geographies. We are ramping up our capacity to recognize net new bookings as organic growth through 2023. The onboarding of the new DJAG contract in Australia required VIQ to adopt their new technology that altered the way orders were processed and how workflows were executed. This had a short-term impact on production and the constraining capacity in limiting the onboarding of new agreements that were earmarked to begin in late July and August.
This also impacted our on-time delivery of our existing contracts and revenue associated with turnaround time modifications that drove lower revenue and lower revenue profile. We had great wins across products, industries, and geographies. We strengthened relationships with our clients and partners. We expanded our relationship in insurance to include partnerships with 7 of the top 10 U.S. insurance companies, increasing their productivity and expediting access to documentation using our AI-powered technology. The Criminal Investigations Bureau investigates crimes against people and crimes against property. It is of vital importance that information and quotes collected from the interviews are accurate and provide comprehensive evidence to support testimony in court. Our FirstDraft has been proven to reduce efforts to transcribe interviews by at least 50%, decrease overhead costs by implementing AI-generated transcripts, and to save time on more important investigation tasks.
Deputies and detectives across the U.S. are editing the AI-generated interview transcripts to include in their investigative report within 1 hour versus the previous three hours to three days. We expanded our global NetScribe footprint, selling to transcription companies, courts, and law firms to secure and transform the way transcripts are created. We signed a multi-year contract with a global transcription services company to use and resell NetScribe platform across all of India. Our technology is making a difference in the way transcripts are created, workflows are processed, and information is accessed. One of our clients realized a 40% improvement in turnaround time with NetScribe. Their production workflow is resulting in cost efficiencies. They have greater enterprise functionality compared to their competitors. They can handle an increased number of projects simultaneously. Best of all, they increase transcriptionist and client satisfaction.
This is a true testament to how our technology will drive improvements both internally for us and for our clients across the globe. We brought new innovations to market. We further enhanced our proprietary automated speech recognition technology, which improved efficiency and diarization, along with the usability and accuracy of our FirstDraft in all verticals. Our strategy to remain engine agnostic ensures that we utilize the best suited and most efficient engine, focusing our R&D investments on industry, geography, and customer-centric customizations based on the characteristics of the file. Creating the best document is reliant on the engine's ability to learn and take advantage of our vast database of content to accelerate our improvements in AI for targeted industries like insurance, media, and courts.
We also enhanced the Carbon solution to include strategic integration with Sony Ci to create efficiency and speed complex projects for media professionals across the globe. The integration with Sony Ci securely manages synced audio and video recording for expedited content creation, enabling the media team to utilize VIQ's AI-powered draft documentation to self-edit or send on for professional verbatim recorded documentation by VIQ's team, which is now utilized by major news and media outlets. We announced a strategic partnership with ORdigiNAL, expanding our reach in EMEA to their 1,200 resellers. This partnership anchors on our delivery of multi-speaker speech solutions to the partners that have historically focused on single speaker products. We share alignment on bringing cloud-based solutions to legal, law enforcement, and courts across EMEA. Our teams responded to this extraordinary opportunity by enhancing our NetScribe technology to allow for a more self-automated implementation and reporting.
These changes increase access to this market and appeal to a broader range of users as we pivot to our critical subscription model. What I believe is the greatest achievement of 2022 is the relationship that VIQ continues to maintain with our customers. Despite the headwinds of 2022, largely precipitated by capacity constraints, we renewed all of our major contracts that were set to expire this period. We sacrificed short-term growth to preserve our essential relationships during this time, and we have seen this in our continued customer loyalty. In closing, I am confident in our team and our ability to manage near term while continuing to position ourselves for the future. We are unwavering in our commitment to deliver customer success and in our transformation to profitable growth.
I will now pass the call over to Alexie to discuss our financial results in greater detail. Alexie?
Thank you, Susan, and good morning, good afternoon, and good evening to everyone. Let me recap a few of our fourth quarter 2022 financial highlights. Q4 revenue of $10.2 million, an increase of $2.7 million or 35% from the same period in the prior year, primarily driven by a full quarter of Auscript versus 18 days in the prior year quarter. Gross profit of $4.8 million, an increase of $1.5 million or 45% from the same period in the prior year. The gross margin was 46.8% versus 43.7% in the prior year. Our net loss was $2.2 million, which is a decrease of $1.5 million versus last year.
Finally, our adjusted EBITDA was negative $1.2 million, representing a decrease of $0.6 million or 35% from last year. Our full year 2022 financial highlights provide an overall picture of the year. Firstly, we generated revenue of $45.8 million, which was an increase of $15 million or 48% from 2021. Our gross profit was $21.9 million, an increase of $7 million or 47% from the same period in the prior year. Our net loss was $8.7 million, which represented a decrease of $11 million or 56% from 2021. Our adjusted EBITDA was a negative $3.4 million, a decrease of $1.5 million or 31% from the same period in the prior year.
The improvement in adjusted EBITDA was mainly driven due to efficiency gains from scalability, cost-cutting measures, and lower corporate costs than in 2021. We refinanced our legacy debt facility 11 months ahead of maturity. On January 13, 2023, we entered a senior debt facility with Beedie Investments Ltd. With maximum available funds of $15 million, $12 million of the loan has been advanced to VIQ, with an additional $3 million available to be drawn for growth initiatives. In 2022, we adjusted our focus, aligning our global resources, conducting a 10% reduction in headcount, and restructured to improve adjusted EBITDA as we work to evolve into a leaner, more data-driven company without sacrificing our ability to scale and meet customer demands. As we look to begin generating positive free cash flow later this year, we believe this facility provides us with the necessary liquidity to support growth.
Now, I'd like to hand it over to the operator for a Q&A session.
At this time, if you would like to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile a Q&A roster. Again, if you would like to ask a question, press star one on your telephone keypad. Your first question comes from the line of Scott Buck with H.C. Wainwright. Your line is open.
Hi. Good morning, everybody. Thanks for taking my question. Sébastien, I was hoping maybe you could speak a little bit to revenue visibility in 2023. I noticed there wasn't any conversation in the press release or on the call about targets, goals, which, you know, is a little bit of a departure from previous quarters.
Yeah. We decided to do is at this point to really opt for no specific guidance going into 2023. At this point, we really are focusing on Q1 and Q2, and then we'll come back, I think, more openly kind of halfway through the year with an update in terms of where we're at. Particularly after last year and some of those organic and basically net new bookings that got delayed because of all those environmental constraints that we talked about, we felt it was prudent going into 2023 without really providing any specific guidance.
We do have obviously a large number of net new bookings that came through last year. Obviously, we're actively trying to accelerate the wrap-up of those contracts, which will translate into organic growth in Q1 and Q2. We also have a number of very large and mid-size opportunities with ORdigiNAL Susan alluded to across Europe and EMEA that are in the process of going into valuation. Depending of all of those assumptions coming out in the first six months of the year, we felt it was more prudent to basically abstain for providing specific guidance knowing that we will come back to you probably later in July with an update.
At that point, once those assumptions have been fully validated and there's been no environmental constraint impacting our capability to scale, then we'll provide a little bit more specific guidance moving forward.
Thanks. That's helpful. Then, as you migrate Australia to NetScribe, do you anticipate those growth margins to look more like the U.S. in the mid-50s or more like the U.K. at potentially 60%+?
That's a very good question we've been asked a lot. I think what we're aiming for is obviously it's a process, it's a journey, but we're truly aiming towards what was accomplished in the United States. It's gonna take some time, but now Australia representing 57% of our revenue, then you can appreciate that gaining a 10%-15% gross margin on that revenue in Australia will be absolutely significant moving forward. Again, we wanna be conservative, and those migrations are well underway as we speak, and then we'll provide an update halfway through the year. Susan?
Okay. Perfect. That's helpful. Last thing, are there any more levers on in OpEx that you could potentially pull to reduce, you know, costs further there if you had to? Or are you kind of cut down to the bone at this point?
Yeah. We're constantly monitoring OpEx, Scott, and we are reviewing on a monthly basis, and we will take whatever action necessary to maintain OpEx below a certain level.
Okay. Perfect. I appreciate the additional color, guys. Thank you very much.
Thank you, Scott.
Your next question is from the line of Brian Kinstlinger with A.G.P. Your line is open.
Hi, guys. Thanks for taking my questions. Can you talk about when you expect the Queensland contract will be at a mature, steady state? Then also when you expect you will have onboarded new contracts that you have been awarded?
Susan, do you wanna take that on?
Sure. I would say, Brian, that the new Queensland contract is probably at 90% efficiency right now. It gets better every single month. As I referenced in my remarks, it was a long slog from July till now. It's been a combination of both our internal adoption of their technology and some technical issues that the courts actually had on their end, and I think we're at full stride. I think that we will be fully up to what I would call business as usual by early May. We're doing really well now.
In terms of the execution of the bookings from 2022, it's been a slower than anticipated onboarding process because of the constraints that I referenced also in my speaking notes. We are starting to see the implementation and the landing of the two major contracts that came out of 2022, and we expect that by June those contracts will be fully onboarded.
At scale.
Just to be clear, when you're talking about 90% efficiency on Queensland, does that mean all the volume's going through but you're not as efficient as you can be? Or does that mean that you're only doing 90% roughly of the volume that you could possibly do?
No. We're doing all of the volume that we can possibly be. Actually, our volumes are accelerating, pretty quickly. We're at all the volumes that we are allocated through that contract. I'm talking about the efficiency rates from the internal teams that have affected our cost structures around that.
Right. Okay. The first quarter is typically seasonally light. I believe it's in Australia that is the reason, as some courts shut down. Again, I could be mistaken on my geographies and my memory.
No, you're correct.
Should we think about it as seasonally weak compared to the fourth quarter, or should we think about that fourth quarter missed some revenue and those seasonality versus oncoming revenue may offset each other?
The fourth quarter is the highest in terms of the seasonality impact. You're absolutely correct. Basically, 95% of the courts will shut down between Christmas and the end of January. Obviously we plan for this. It's been like that forever. Then those contracts starts really going back to normal capacity in February and March. Alex, I think from a model perspective, what to expect.
I think, it's Brian, you know, as I've alluded to, right? I mean, the courts are shut down for most of January. Q1 is gonna be within the same range I would say as Q4 or slightly better, based on seasonality trends. That's how we view it.
Great. My other question is, we obviously see the balance sheet at the end of the fourth quarter and you discussed subsequent events. I guess I just wanna make sure how much of the, I think it was, I forget the number, $13 million or $15 million that you took, is used to offset pay down the other debt? Have you taken $12 million that's sitting as cash on the balance sheet? I'm just trying to understand, you know, what cash looks like, where you are roughly today.
Yeah. we drawed on $12 million as an initial advance. Most of that was used to liquidate the Crown debt of about, approximately, $8 million. Plus we paid fees associated with the financing, and the balances is being absorbed in business, additional working capital. It's too early. we haven't finalized the March numbers, so at this point, we cannot provide an actual cash update in terms of where the balance is. The $12 million was-- most of it was utilized to pay down the Crown debt, and some fees associated with the debt, and the balance was absorbed for working capital.
Okay. All right. Thanks, guys.
Thank you, Brian.
Thanks, Brian. There are no further questions at this time. I would like to turn the conference back over to Sébastien Pare for closing remarks.
No, thank you. I would like to again, thank you for taking the time. We'll be back in terms of reporting Q1 fairly quickly in terms of the month of May. If you've got any questions or any outstanding that you think will need require a little bit more details as first questions, please do not hesitate to reach out to Laura Kiernan. On that point, thank you very much and have a good day.
Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.