Quisitive Reports Second Quarter 2021 Financial Results

Company Announces Record Quarter as it Activates its Payments Solution Business

TORONTO, Aug. 30, 2021 (GLOBE NEWSWIRE) -- Quisitive Technology Solutions Inc. (“Quisitive” or the “Company”) (TSXV: QUIS), a premier Microsoft Cloud Services and Payment Solutions Provider, today reported financial results for the second quarter ended June 30, 2021.

Management Commentary
“The second quarter was a consecutive period of gained momentum as we continue to invest in the future of our business through focused growth initiatives and accomplishing key milestones within our payments solutions business,” said Quisitive CEO Mike Reinhart. “With the completed bank sponsorship, the current integration of BankCard into our back-end systems, and the achievement of PCI certification, we are making significant progress towards the full commercialization of LedgerPay. We have a growing pipeline of prospective customers that are spread across the grocery chain segment, fuel stations, multi-chain restaurant franchises, convenience store chains, and ISVs. In parallel with the growth from our payments division, we are also experiencing productive headway across our cloud solutions and M&A front. We have a multitude of potential acquisition targets that have proactively approached us due to the progress we’ve made, the trajectory we’re headed towards, and our robust position as a Microsoft cloud leader. Our multi-pronged approach of organic growth within the two segments of our business, paired with an inorganic strategy will prime us for greater topline results and an expanded market footprint as a global Microsoft partner.”

Second Quarter 2021 Financial Results
The Company’s unaudited condensed consolidated interim financial statements for three and six months ended June 30, 2021 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.sedar.com. All figures are expressed in United States dollars unless otherwise stated.

  • Second quarter revenue increased 75% to $23.0 million compared to $13.1 million, for the quarter ended June 30, 2021.

  • Gross margin increased 48% to $8.3 million compared to $5.6 million, for the quarter ended June 30, 2021.

  • Adjusted EBITDA increased 29% to $3.6 million compared to an Adjusted EBITDA of $2.8 million, for the three months ended June 30, 2021.

  • Net loss was $2.9 million compared with net loss of $5.7 million, for the three months ended June 30, 2021.

Second Quarter 2021 and Subsequent Operational Highlights

  • Achieved PCI-DSS Certification for demonstrating LedgerPay’s robust security protocols and commitment to customer information security.
  • Achieved Independent Standards Organization 27001 and 22301 certifications for LedgerPay.
  • Recognized as the 2021 Microsoft Healthcare Partner of the Year award above a global field of top Microsoft partners for demonstrating excellence in innovation and implementation of customer solutions based on Microsoft technology.
  • Achieved the Microsoft Business Applications 2021/2022 Inner Circle Award based on sales achievements that rank Quisitive in the top echelon of the Microsoft Business Applications global network of partners.
  • Completed acquisition of Mazik Global Inc.
  • Announced the closing of C$62.6 million equity financing transaction in connection with the acquisition of BankCard USA Merchant Services, Inc. and increased the debt facility with Canadian Schedule 1 Charter Bank by $50 million USD.
  • Completed the transformational acquisition of BankCard USA.
  • Received patent approval its payment security solution, AgeChecker.
  • Signed a long term $70 million term credit facility with syndicate led by Bank of Montreal and including Desjardins Capital Markets replacing existing credit facility with a Canadian Schedule 1 bank.
  • Selected as Omnitracs Microsoft Office 365 tenant-tenant migration provider.
  • Achieved the Microsoft Adoption and Change Management Advanced Specialization, a prestigious status that is only granted to select Microsoft partners who demonstrate deep knowledge and extensive experience.
  • Announced election of Laurie Goldberg to Board of Directors, effective June 28, 2021.
  • Acquired and closed bank sponsorship with The Bancorp Bank for LedgerPay payment processing.
  • Announced proceeds of $12 million from warrant exercises.

Conference Call
Quisitive management will hold a conference call today (August 30, 2021) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

Company CEO Mike Reinhart and CFO Michael Murphy will host the call, followed by a question and answer period.

Canada/U.S. dial-in: 1-800-319-4610
International dial-in: 1-416-915-3239

Please dial-in approximately 10 minutes beforehand and ask to join the Quisitive conference call. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.

A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time.

Toll-free replay number: 1-800-319-6413
International replay number: 1-604-638-9010
Replay ID: 7579

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 quarters ended June 30, 2021 and 2020:

 Three Months Ended
 Six Months Ended
 June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Revenue 22,994  13,125  35,622  24,011 
Cost of Revenue14,695  7,484  23,033  14,333 
Gross Margin8,299  5,641  12,589  9,678 
Gross Margin Percentage 36% 43% 35% 40%
Operating Expenses           
Sales and marketing expense1,452  1,166  2,480  2,203 
General and administrative3,247  1,666  5,324  3,496 
Development92  41  403  108 
Share-based compensation73  179  462  385 
Interest expense1,196  971  1,475  1,961 
Grant Income(19)  (23)    (23)
Amortization2,612  1,038  3,490  2,069 
Depreciation328  194  581  374 
Acquisition related compensation253    253   
Foreign exchange loss (gain)48  565  326  232 
Transaction related expenses3,222  150  3,678  284 
Change in fair value of derivative           
Liability  5,313    8,455 
Loss Before Income Taxes (4,205)  (5,619)  (5,883)  (9,866)
Income tax expense – current461  298  891  559 
Deferred income tax recovery(1,731)  (164)  (1,892)  (361)
Net Loss for the Period $ (2,935)  $ (5,753)  $ (4,882)  $(10,064)

About Quisitive
Quisitive (TSXV: QUIS) is a premier, global Microsoft partner that harnesses the Microsoft platform and complementary technologies, including custom solutions and first-party offerings, to generate transformational impact for enterprise customers. Our Cloud Solutions business focuses on helping enterprises move, operate, and innovate in the three Microsoft clouds. Centering on our LedgerPay product suite, our Payments Solutions business leverages the Microsoft Azure cloud to transform the payment processing industry into an entirely new source of customer engagement and consumer value. Quisitive serves clients globally from eleven employee hubs across the world. For more information, visit www.quisitive.com and follow @BeQuisitive. 

Quisitive Company Contact
Tami Anders, Chief of Staff

Quisitive Investor Contact
Matt Glover and John Yi
Gateway Investor Relations

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 the Company use non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues, 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, earn-out settlement losses and non-recurring development costs associated with obtaining bank sponsorship and operational certifications required to complete Ledger Pay. 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 future potential acquisitions, increased revenues, expansion of market footprint, future growth strategies and the full commercialization of LedgerPay. 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 corporate 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 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: changes in technology, customer markets and demand for the Company’s services; the efficacy of the Company’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 favorable 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 Company 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 Company; reliance on the expertise and judgment of senior management of the Company; 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 Company 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 Company’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 Company; price volatility of the common shares of the Company; 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 August 20, 2021 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 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.