Earnings call transcript: Viq Solutions Q2 2025 sees revenue dip, margin up

Viq Solutions Inc reported a mixed second quarter for 2025, with revenues falling 10% year-over-year to $10.4 million, while gross margins improved to 48% from 45.5% a year earlier. The company also recorded a net loss of $900,000 for the quarter. Despite these challenges, Viq Solutions’ stock rose by 2.5%, reflecting cautious investor optimism driven by improved margins and operational efficiencies. According to InvestingPro data, the company maintains a FAIR financial health score of 2.27, though its current ratio of 0.26 suggests potential liquidity challenges.

Key Takeaways

• Revenue fell 10% year-over-year to $10.4 million in Q2 2025.
• Gross margin improved to 48%, up from 45.5% in Q2 2024.
• The company signed its largest SaaS contract in June.
• Positive cash flow from operations was reported at $200,000 in Q2.
• Stock price increased by 2.5% following the earnings release.

Company Performance

Viq Solutions experienced a challenging quarter with a 10% decline in revenue compared to Q2 2024. Despite this, the company managed to improve its gross margin to 48%. The strategic focus on operational efficiency and cost optimization appears to be yielding results, as evidenced by a 24% increase in adjusted EBITDA.

Financial Highlights

• Revenue: $10.4 million (10% decline year-over-year)
• Gross Margin: 48% (up from 45.5% in Q2 2024)
• Adjusted EBITDA: $1 million (24% increase year-over-year)
• Net Loss: $900,000 in Q2

Market Reaction

Following the earnings announcement, Viq Solutions’ stock rose by 2.5%. This increase, albeit modest, suggests that investors are encouraged by the company’s improved margins and operational efficiencies, despite the revenue decline.

Outlook & Guidance

Viq Solutions aims to achieve free cash flow in fiscal 2025, with a strategy focused on continued gross margin expansion and sustainable operations. The company has set a target for Q3 results to be shared in November, and it continues to focus on high-compliance environments with its AI-first platform.

Executive Commentary

CFO Alexi Edwards highlighted the company’s strategic positioning: "With our AI first platform, disciplined execution, and growing staff penetration, vIQ is positioned for sustainable margin expansion, recurring revenue growth, and long-term value creation."

Risks and Challenges

• Continued revenue decline poses a risk to future profitability.
• Market competition in the AI solutions sector could pressure margins.
• Economic uncertainties may impact investment in technology solutions.

Viq Solutions remains focused on expanding its market presence and improving financial performance through strategic initiatives and operational efficiencies.

Full transcript - Viq Solutions Inc (VQS) Q2 2025:

Conference Operator: Good day, ladies and gentlemen, and welcome to the IQ Solutions two thousand twenty five second quarter earnings 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 pound and 0 on your touch tone 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 Liu, corporate finance controller for BIQ.

Please go ahead.

Audrey Liu, Corporate Finance Controller, BIQ: Thank you. Before we begin, please note that certain statements made on today’s call are forward looking within the meaning of applicable securities 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 sedarplus.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.

Alexi Edwards, Chief Financial Officer, vIQ: Thank you, Audrey, and good morning, everyone. We entered 2025 with sustained momentum following a record fiscal twenty twenty four, during which we delivered a 6,000,000 year over year improvement in adjusted EBITDA and expanded gross margin. That trajectory continued through the 2025, fueled by disciplined execution of our automation first strategy, operational efficiencies, and growing adoption of our AI powered SaaS solutions. Q two twenty five marked our fifth consecutive quarter of positive adjusted EBITDA, approximately 1,000,000, up 24% year over year, and gross margin expansion to 48% compared to 45.5% in q two twenty twenty four. For the first half of the year, gross margin was nearly 50%, up 44 up from 44.9% in the same period last year, demonstrating scalability and operating leverage of our AI driven platform.

Strategically, q two also marked a milestone in SaaS adoption. In June, we signed our largest SaaS contract to date. The new deployment will see ZiQ’s NetScribe platform implemented across nine judicial districts and 22 counties in The US 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, achieved its highest level of workforce flexibility and efficiency to date.

The adoption of DevScribe and FirstRoute continues to streamline production costs on shortened turnaround times, contributing to sustained margin improvements In The UK and North America region, both regions consistently deliver gross margins above 60%, underscoring the scalability of our platform. During the 2025, we secured 1,850,000.00 in net new bookings, including 280,000 in SaaS and software sales, reflecting increasing market demand for vertical AI solutions, purpose built for regulated sectors such as justice, law enforcement, insurance, and government. Our ongoing cost optimization launching 2024 is delivering measurable results. We have streamlined our operating structure while continuing targeted r and d investments in automation, advanced diarization, 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 staff penetration, vIQ is positioned for sustainable margin expansion, recurring revenue growth, and long term value creation. Now let me recap our q two twenty five financial highlights. Revenue for the quarter was 10,400,000.0, a 10% year over year decline, driven mainly by decreased volume and negative foreign exchange impact. Q two twenty five gross profit percentage rose to 48% from 45.5% for the same comparative period aided by operational efficiencies. SG and A declined 11%, reflecting organizational restructuring and disciplined expense management.

Adjusted EBITDA was approximately 1,000,000, up from adjusted EBITDA of approximately 800,000 in Q2 twenty twenty four. Net loss was $900000.08300000.0 higher than same comparable period in 2024, driven mainly by the impact of foreign exchange. Adjusted operating loss of 800,000.0, 200,000.0 declined from the same comparative period due mainly to the impact of foreign exchange. We ended the quarter with 1,100,000 in cash, generating 200,000.0 in positive cash flow from operations. Thanks to improved adjusted EBITDA and working capital management.

Now moving on to our H one twenty five financial highlights. Revenue was 20,000,000, a 7% year over year decline driven by the decreased volume and negative foreign exchange impact. Gross profit percentage rose to 50% from 45% from the same comparative period due to operational efficiencies. SG and A declined 11%, reflecting organizational restructuring and disciplined expense management. And adjusted EBITDA was approximately 1,800,000.0, up from adjusted EBITDA of approximately 700,000 in prior year.

Net loss was 2,800,000.0, 8,400,000.0 higher than same comparable period in 2024. And adjusted operating loss of $1500000.08900000000.0 improvement from the same comparative period. In h one twenty twenty five, the company generated 1,000,000,000 in positive cash flow from operations. We are very excited about the clear trends we have established on gross margin increases year over year. Gross margin expansion is a critical element in our goal of reaching free cash flow during fiscal twenty twenty five.

By expanding gross margins, the company aims to achieve sustainable operations and free cash flow in 2025 and beyond. We look forward to sharing our Q3 results in November. For any follow-up questions, please do not hesitate to contact us using the details on our website.

Conference Operator: Thank you. Operator? This concludes today’s call. You may now disconnect.

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