Revenue Increases Over 50% - EBITDA on Track to Profitability - New $4M Credit Facility
TORONTO, ON / ACCESSWIRE / August 29, 2023 / EQ Inc. (TSXV:EQ) ("EQ Works" or the "Company"), a leader in AI and geospatial data driven software and solutions, announced its financial results today for the second quarter ended June 30, 2023.
EQ is very pleased to report that revenue for the quarter increased by over 50% from the previous quarter, to over $2.5 million, as clients continued to increase their investments in AI, data and media solutions. EQ's focus on AI and data driven insights is a significant differentiator in the market and continues to generate interest from companies across multiple verticals. The need for unique, opt-in and real time data is an essential component for every company working to integrate AI solutions into their business and EQ is well positioned to take advantage of this market.
Gross margin for the quarter of 42% was a significant improvement over both the previous quarter and from the same period a year ago. The adjusted EBTIDA also improved significantly as the Company continued to focus on its overall cost structure resulting in an adjusted EBITDA loss for the quarter of $0.4 million an improvement of 57% sequentially and over 64% from the same period a year ago.
EQ remains on track to be profitable by the end of 2023. With a continued focus on higher margin recurring revenue products, including its proprietary AI tools and insight models, the Company's investments in proprietary data assets and solutions are showing strong results. The aggregation of geospatial data, the enhancements to its consumer facing app Paymi, and the deep data partnerships with some of the best data companies in the country have positioned EQ extremely well and is generating renewed interest in its key verticals of retail, financial services and automotive.
"Our focus continues to be on growth and profitability" said Geoffrey Rotstein, President and CEO of EQ Works. "Our network of first party data and the work we do to make that data actionable, has grown significantly over the past few years and with AI becoming an essential tool for all businesses, we are extremely excited about our position in the market and the opportunities currently underway. By focusing on data, and products that lead with data, to drive business results we are confident about the targets we've set for ourselves and our organization."
The Company is also pleased to announce that it has also finalized a new credit facility. After the quarter ended, the Company replaced its revolving line of credit facility with an accounts receivable facility under which the Company can borrow up to $4.0 million based on 85% of the eligible accounts receivable aged under 90 days.
In addition, subsequent to quarter end the Company granted 100,000 stock options to an employee of the Company. These stock options are exercisable at CDN $0.95 per stock option and will expire on August 29, 2028. These stock options vest over a period of thirty-six months following the grant date and are governed by the terms and conditions of the Company's stock options plan. Following this grant of stock options, the Company has a total of 2,008,500 stock options outstanding representing approximately 2.9% of the outstanding common shares of the Company.
Non-IFRS Financial Measures
EQ Works measures the success of the Company's strategies and performance based on Adjusted EBITDA, which is outlined and reconciled with net loss in the section entitled "Reconciliation of Net Loss for the period to Adjusted EBITDA" in the MD&A. The Company defines Adjusted EBITDA as net loss from operations before: (a) depreciation of property and equipment and amortization of intangible assets, (b) share-based payments, (c) finance income and costs, net, (d) depreciation of right-of-use assets (e) restructuring costs. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information on the Company's ability to provide operating cash flows for working capital requirements, capital expenditures, and potential acquisitions. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.
The non-IFRS financial measure is used in addition to, and in conjunction with, results presented in the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent, or non-recurring.
The table below reconciles net loss from operations and Adjusted EBITDA for the periods presented:
About EQ Works
EQ Works ( www.eqworks.com ) enables businesses to understand, predict, and influence customer behaviour. Using unique data sets, advanced analytics, machine learning and artificial intelligence, EQ Works creates actionable intelligence for businesses to attract, retain, and grow the customers that matter most. The Company's proprietary SaaS platform mines insights from movement and geospatial data, enabling businesses to close the loop between digital and real-world consumer actions.
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions, or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates, and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied, or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance, or achievements to differ materially include, but are not limited to, the risk factors discussed in the Company's MD&A for the three months ended June 30, 2023. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives but cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and any other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect subsequent information, events, or circumstances or otherwise, except as required by law.
EQ Inc.
Peter Kanniah, Chief Financial Officer
1235 Bay Street, Suite 401| Toronto, Ontario |M5R 3K4
[email protected]
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Financial Position
(In thousands of Canadian dollars)
| June 30, 2023 | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 458 | $ | 1,253 | ||||
Accounts receivable | 2,373 | 3,535 | ||||||
Other current assets | 223 | 234 | ||||||
| 3,054 | 5,022 | |||||||
Non-current assets: | ||||||||
Property and equipment | 36 | 55 | ||||||
Intangible assets | 2,007 | 2,156 | ||||||
Goodwill | 2,914 | 2,914 | ||||||
| 4,957 | 5,125 | |||||||
Total assets | $ | 8,011 | $ | 10,147 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 3,125 | $ | 3,488 | ||||
Rewards payable | 1,338 | 1,281 | ||||||
Loans and Borrowings | 79 | 79 | ||||||
Contract liabilities | 201 | 60 | ||||||
| 4,743 | 4,908 | |||||||
Shareholders' equity | 3,268 | 5,239 | ||||||
Total liabilities and shareholders' equity | $ | 8,011 | $ | 10,147 | ||||
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except per share amounts)
Three and six months ended June 30, 2023 and 2022
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue | $ | 2,541 | $ | 3,240 | $ | 4,232 | $ | 5,954 | ||||||||
Expenses: | ||||||||||||||||
Publishing costs | 1,485 | 1,989 | 2,528 | 3,765 | ||||||||||||
Employee compensation and benefits | 941 | 1,223 | 2,024 | 2,627 | ||||||||||||
Other operating expenses | 543 | 1,246 | 1,111 | 2,450 | ||||||||||||
Depreciation of property and equipment | 8 | 17 | 19 | 38 | ||||||||||||
Depreciation of right-of-use asset | - | - | - | 6 | ||||||||||||
Amortization of intangible assets | 204 | 158 | 449 | 278 | ||||||||||||
Restructuring costs | - | - | 122 | - | ||||||||||||
| 3,181 | 4,633 | 6,253 | 9,164 | |||||||||||||
Loss from operations | (640 | ) | (1,393 | ) | (2,021 | ) | (3,210 | ) | ||||||||
Finance income | 7 | 22 | 5 | 18 | ||||||||||||
Finance costs | (6 | ) | (10 | ) | (11 | ) | (48 | ) | ||||||||
Loss before income taxes | (639 | ) | (1,381 | ) | (2,027 | ) | (3,240 | ) | ||||||||
Net loss | (639 | ) | (1,381 | ) | (2,027 | ) | (3,240 | ) | ||||||||
Loss per share: | ||||||||||||||||
Basic and diluted | (0.01 | ) | (0.02 | ) | (0.03 | ) | (0.05 | ) | ||||||||
EQ Inc.
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2023 and 2022
| 2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | (2,027 | ) | (3,240 | ) | ||||
Adjustments to reconcile net loss to net cash flows | ||||||||
from operating activities: | ||||||||
Depreciation of property and equipment | 19 | 38 | ||||||
Depreciation of right-of-use asset | - | 6 | ||||||
Amortization of intangible assets | 449 | 278 | ||||||
Share-based payments | 30 | 132 | ||||||
Unrealized foreign exchange loss (gain) | 1 | (7 | ) | |||||
Finance costs (income), net | (5 | ) | 30 | |||||
Change in non-cash operating working capital | 1,008 | 67 | ||||||
Net cash used in operating activities | (525 | ) | (2,696 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayment of obligations under property lease | - | (45 | ) | |||||
Proceeds from exercise of stock options | 26 | - | ||||||
Net cash from (used in) financing activities | 26 | (45 | ) | |||||
Cash flows from investing activities: | ||||||||
Interest income received | 5 | 17 | ||||||
Purchases of property and equipment | - | (17 | ) | |||||
Addition of intangible assets | (300 | ) | (300 | ) | ||||
Net cash used in investing activities | (295 | ) | (300 | ) | ||||
Decrease in cash | (794 | ) | (3,041 | ) | ||||
Foreign exchange gain (loss) on cash held in foreign currency | (1 | ) | 7 | |||||
Cash, beginning of the period | 1,253 | 8,763 | ||||||
Cash, end of the period | $ | 458 | $ | 5,729 | ||||
SOURCE: EQ Inc.