Quisitive Technology Solutions Inc.
(“Quisitive” or the “Company”) (TSXV: QUIS, OTCQX:
QUISF), a premier Microsoft Cloud and AI solutions
provider, today reported financial results for the second quarter
ended June 30, 2024.
Management Commentary“The first
half of 2024 has unfolded as anticipated, with consistent revenue
and earnings, alongside promising growth in customer demand,”
stated Quisitive CEO Mike Reinhart. “Our AI roadmap services have
been met with strong customer interest, resulting in a robust
backlog of engagements. This is a positive sign, as the initial
readiness phase is crucial for setting the stage for the full-scale
AI deployment in 2025, which is key to maximizing our AI investment
returns. With 90% of our first-half revenue coming from
long-standing customers, we are seeing strong reengagement and
continued trust in our services. As customer purchasing patterns
have improved, we are optimistic about the remainder of this year
and into 2025, especially as we align with Microsoft’s AI
go-to-market strategy to drive innovation in this transformative AI
landscape.”
Second Quarter 2024 Financial
ResultsThe Company’s condensed consolidated interim
financial statements for the three months ended June 30, 2024 and
related management’s discussion and analysis can be found on the
Company’s website and on the Company’s issuer profile on SEDAR at
www.sedarplus.ca. All figures are expressed in United States
dollars unless otherwise stated.
- Revenue from continuing operations
was $29.6 million compared to $30.2 million for the second quarter
ended June 30, 2023. The decline was driven by reduced market
demand within professional services revenue and the Company’s
corresponding reduction in revenue-generating headcount. The
decrease in professional services revenue was partially offset by
increased revenue from managed services and software licensing.
Additionally, recurring revenue increased to 41.9%, a record for
Quisitive, driven primarily by growth in our managed services
revenue.
- Gross profit from continuing
operations as a percentage of revenue increased to 42% compared to
39% for the second quarter ended June 30, 2023. The improvement was
primarily due to the Company streamlining its cost basis as part of
headcount reductions.
- Gross profit from continuing
operations was $12.5 million compared to $11.7 million for the
second quarter ended June 30, 2023.
- Adjusted EBITDA from continuing
operations was $3.9 million compared to $1.9 million for the second
quarter ended June 30, 2023.
- The Company’s total senior debt to
Adjusted EBITDA ratio was approximately 1.8x on a pro forma basis
at June 30, 2024.
Second Quarter 2024 and Recent
Operational Highlights
- Awarded the 2024 Microsoft Global
Analytics Partner of the Year Award
- Recognized as Board International’s
Solution Partner of the Year for the second consecutive year.
- Appointed Dan Kunz as Executive
Vice President of Microsoft Cloud and AI Global Delivery
Organization
- Completed the sale of BankCard USA
and exited the payments division, transforming into a unified
entity centered around Microsoft cloud services and AI.
Fiscal Year 2024 Guidance
Quisitive reaffirms its prior disclosed guidance for fiscal year
2024:
|
Low |
High |
Fiscal Year 2024 Revenue from Continuing Operations |
120,000,000 |
130,000,000 |
Fiscal Year 2024 Pro Forma Adjusted EBITDA from Continuing
Operations |
15,000,000 |
17,000,000 |
Conference CallQuisitive
management will hold a conference call today (August 20, 2024) at
5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss these
results.
Company CEO Mike Reinhart and CFO Scott Meriwether will host the
call, followed by a question-and-answer period.
Toll Free dial-in: 1-877-704-4453International dial-in:
1-201-389-0920Webcast Link: Here
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Group at 949-574-3860.
A telephonic replay of the conference call will be available
after 8:00 p.m. Eastern time today and will expire after Tuesday,
September 3, 2024.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 13748315
For additional information, please visit the Investor Relations
section of Quisitive’s website
at: https://quisitive.com/investor-relations/.
The following table summarizes results for the three and six
months ended June 30, 2024 and 2023:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2024 |
|
June 30, 2023 |
|
June 30, 2024 |
|
June 30, 2023 |
Revenue continuing operations |
$ |
29,623 |
|
|
$ |
30,233 |
|
|
$ |
59,526 |
|
|
$ |
62,135 |
|
Cost of
Revenue |
|
17,157 |
|
|
|
18,575 |
|
|
|
34,253 |
|
|
|
38,582 |
|
Gross
Margin |
|
12,466 |
|
|
|
11,658 |
|
|
|
25,273 |
|
|
|
23,553 |
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
Sales and marketing
expense |
|
3,768 |
|
|
|
3,044 |
|
|
|
7,672 |
|
|
|
6,232 |
|
General and
administrative |
|
4,885 |
|
|
|
6,710 |
|
|
|
9,946 |
|
|
|
12,084 |
|
Development |
|
112 |
|
|
|
110 |
|
|
|
218 |
|
|
|
224 |
|
Share-based compensation |
|
423 |
|
|
|
710 |
|
|
|
885 |
|
|
|
2,661 |
|
Interest expense |
|
754 |
|
|
|
1,659 |
|
|
|
2,586 |
|
|
|
3,280 |
|
Amortization |
|
1,741 |
|
|
|
1,870 |
|
|
|
3,712 |
|
|
|
3,810 |
|
Acquisition related
compensation |
|
177 |
|
|
|
29 |
|
|
|
177 |
|
|
|
638 |
|
Depreciation |
|
221 |
|
|
|
256 |
|
|
|
476 |
|
|
|
543 |
|
Foreign exchange loss
(gain) |
|
(77 |
) |
|
|
203 |
|
|
|
(234 |
) |
|
|
219 |
|
Acquisition-related,
transaction and other expenses |
|
2,987 |
|
|
|
295 |
|
|
|
3,521 |
|
|
|
737 |
|
Loss on debt
extinguishment |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other income |
|
(15 |
) |
|
|
29 |
|
|
|
(20 |
) |
|
|
10 |
|
Loss Before Income
Taxes |
|
(2,510 |
) |
|
|
(3,257 |
) |
|
|
(3,666 |
) |
|
|
(6,885 |
) |
Income tax expense (recovery)—
current |
|
(607 |
) |
|
|
217 |
|
|
|
(583 |
) |
|
|
845 |
|
Deferred income tax
recovery |
|
- |
|
|
|
(349 |
) |
|
|
- |
|
|
|
(877 |
) |
Loss from continuing
operations |
$ |
(1,903 |
) |
|
$ |
(3,125 |
) |
|
$ |
(3,083 |
) |
|
$ |
(6,853 |
) |
Discontinued
Operations |
|
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of tax |
|
9,350 |
|
|
|
(293 |
) |
|
|
16,723 |
|
|
|
847 |
|
Income (Loss) for the
Period |
$ |
7,447 |
|
|
$ |
(3,418 |
) |
|
$ |
13,640 |
|
|
$ |
(6,006 |
) |
|
|
|
|
|
|
|
|
About Quisitive:Quisitive (TSXV: QUIS, OTCQX:
QUISF) is a premier, global Microsoft partner leveraging the power
of the Microsoft cloud platform and artificial intelligence,
alongside custom and proprietary technologies, to drive
transformative outcomes for its customers. The Company focuses on
helping enterprises across industries leverage the Microsoft
platform to adopt, innovate, and thrive in the era of AI. For more
information, visit www.Quisitive.com and follow @BeQuisitive.
Quisitive Investor ContactMatt Glover and John
YiGateway GroupQUIS@gateway-grp.com 949-574-3860
Tami AndersChief of
Stafftami.anders@quisitive.com972.573.0995
Financial Measures and Adjusted
EBITDAThere 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 the Company use non-GAAP
financial measures, such as Adjusted EBITDA, in making investment
decisions about the Company 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, transaction and acquisition-related
expenses, US payroll protection plan loan forgiveness, and earn-out
settlement losses..
Management considers these non-operating
expenses to be outside the scope of Quisitive's 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 is a non-GAAP
financial measure and may not be comparable to similarly titled
measures reported by other companies. Adjusted EBITDA 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 does have
limitations as 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
This news release contains certain
“forward‐looking information” and “forward‐looking statements”
(collectively, “forward‐ looking statements”) within the meaning of
applicable Canadian securities legislation regarding Quisitive and
its business. Any statement that involves discussions with respect
to predictions, expectations, beliefs, plans, projections,
objectives, assumptions, future events or performance (often but
not always using phrases such as “expects”, or “does not expect”,
“is expected”, “anticipates” or “does not anticipate”, “plans”,
“budget”, “scheduled”, “forecasts”, “estimates”, “believes” or
“intends” or variations of such words and phrases or stating that
certain actions, events or results “may” or “could, “would”,
“might” or “will” be taken to occur or be achieved) are not
statements of historical fact and may be forward‐looking
statements. Forward‐ looking statements are necessarily based upon
a number of estimates and assumptions that, while considered
reasonable, are subject to known and unknown risks, uncertainties,
and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such
forward‐looking statements. These forward-looking statements
include, but are not limited to, statements relating to: the future
growth potential of the Company, including new revenue streams;
future financial outlook of the Company; and potential for growth
and expectations regarding the Company’s ability to capitalize on
the expanding opportunities emerging from AI advancements.
These forward-looking statements are based on
reasonable assumptions and estimates of management of the Company
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: the expected
results from the completion of the sale of BankCard; fluctuations
in general macroeconomic conditions; fluctuations in securities
markets; the ability to realize on cost saving measures; the
Company’s limited operating history; future capital needs and
uncertainty of additional financing; the competitive nature of the
technology industry; unproven markets for the Company’s product
offerings; lack of regulation and customer protection; the need for
the Company to manage its future strategic plans; the effects of
product development and need for continued technology change;
protection of proprietary rights; network security risks; the
ability of the Company to maintain properly working systems;
foreign currency trading risks; use and storage of personal
information and compliance with privacy laws; use of the Company’s
services for improper or illegal purposes; global economic and
financial market conditions; uninsurable risks; changes in project
parameters as plans continue to be evaluated; and those factors
described under the heading "Risks Factors" in the Company's annual
information form dated May 23, 2023 available on SEDAR+ at
www.sedarplus.ca. 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 Company does not
undertake any obligations to release publicly any revisions for
updating any voluntary forward-looking statements, except as
required by applicable securities law..
This news release also contains future-oriented
financial information and financial outlook information (together,
“FOFI”) about the Company’s prospective results of operations,
including statements regarding expected pro-forma Adjusted EBITDA.
FOFI is subject to the same assumptions, risk factors, limitations
and qualifications as set forth in the above paragraph. The Company
has included the FOFI to provide an outlook of management’s
expectations regarding the Company on a post-Transaction basis and
other anticipated activities and results, and such information may
not be appropriate for other purposes. The Company and management
believe that the FOFI has been prepared on a reasonable basis,
reflecting management’s reasonable estimates and judgements;
however, actual results of operations and the resulting financial
results may vary from the amounts set forth herein. Any financial
outlook information speaks only as of the date on which it is made
and the Company undertakes no obligation to publicly update or
revise any financial outlook information except as required by
applicable securities laws.
Neither the 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.
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