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Quisitive Reports Strong Third Quarter 2021 Financial Results

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Company Announces Record Quarterly Revenues of $27.8 million

TORONTO, Nov. 22, 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 third quarter ended September 30, 2021.

Management Commentary
“Despite the effects of certain macroeconomic headwinds, the closing of the third quarter marked another strong period of growth and milestone achievements as we made incremental expansions on both the cloud solutions and payment businesses,” said Quisitive CEO Mike Reinhart. “As announced this morning, the closing of the Catapult acquisition further establishes Quisitive as the premier global Microsoft cloud-solutions partner, building upon an existing set of IP and comprehensive services, adding additional recurring management services, while expanding Quisitive’s geographic footprint and highly skilled employee base.

“On the payment solutions side, our continued priority and emphasis remains to be on the full commercialization of LedgerPay. Though there is a minor delay in card network certification resulting from the national supply chain issue, we’ve been able to secure PCI Level 1 certification and a contract with Paytron to employ LedgerPay’s advanced payment processing services to its customers. Coupling LedgerPay’s advancements along with the successes of BankCard and the Mazik Global acquisitions has increased our value proposition and strengthened our foundational revenue streams. We continue to look upon the future with much excitement and anticipation, as our active M&A efforts, coupled with the robust organic growth we’ve been seeing, leaves us optimistic for the potential of Quisitive to be a unique and powerful player both inside the Microsoft ecosystem as well as a disruptor in the payments industry.”

Third Quarter 2021 Financial Results
The Company’s unaudited condensed consolidated interim financial statements for three and nine months ended September 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.

  • Third quarter revenue increased 119% to $27.8 million for the quarter ended September 30, 2021 compared to $12.7 million for the quarter ended September 30, 2020.

  • Gross margin increased 113% to $10.9 million for the quarter ended September 30, 2021 compared to $5.1 million, for the quarter ended September 30, 2020.

  • Adjusted EBITDA increased 152% to $5.2 million for the three months ended September 30, 2021 compared to an Adjusted EBITDA of $2.0 million, for the three months ended September 30, 2020.

  • Net loss was $3.0 million for the three months ended September 30, 2021 compared with net loss of $1.8 million for the three months ended September 30, 2020.

  • Payment volume for the three months ended September 30, 2021 was $940 million.

Third Quarter 2021 and Subsequent Operational Highlights

  • Announced closing of Catapult Systems acquisition.

  • Signed a definitive agreement to acquire Catapult Systems, a leading Microsoft-focused solutions and services firm that specializes in imagining, building, and sustaining digital transformation and cloud based solutions.

  • Secured ISO customer in Paytron Merchant Services, becoming one of the first LedgerPay contracts with an Independent Sales Organization.

  • Achieved PCI-DSS Certification for demonstrating LedgerPay’s robust security protocols and commitment to customer information security.

  • Signed a long term $70 million term credit facility with a syndicate led by Bank of Montreal, including Desjardins Capital Markets, which replaced existing credit facility with a Canadian Schedule 1 bank.

  • Selected as Omnitracs Microsoft Office 365 tenant-tenant migration provider.

  • Received a patent for its payment security solution, AgeChecker; a software that leverages high quality data sources and intelligent matching technology to verify the identity of more than 90% of the U.S. population within seconds.

  • 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.

  • 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.

  • 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.

  • Chosen by Microsoft as a strategic partner to develop their upcoming Platform of Intelligent Order Management (IOM). IOM was announced earlier this month during Microsoft Ignite Conference by CEO Satya Nadella.

  • Activated a major Healthcare provider in the UK with Quisitive’s MazikCare SaaS solution which is expected to ramp up to accommodate 250,000 patients. This provider also signed a contract to expand the platform for other European countries.

  • Selected by one of the largest national providers of mortgage services, lending services, and tri-merge credit reports to consolidate ERP functions across seven operating brands.

  • Closed a recurring licensing deal for Microsoft 365 and Azure for a major community bank with over 85 locations throughout Oklahoma and Texas.

  • Awarded a contract for developing a data and analytics solution for a major international movie theatre chain through Quisitive’s OnRamp to Azure Data program. This solution will be leveraged to provide additional insight to a highly successful customer loyalty program.

Conference Call
Quisitive management will hold a conference call today (November 22, 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: 8086

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 September 30, 2021 and 2020:

Sept. 30, 2021

Sept. 30, 2020

Sept. 30, 2021

Sept. 30, 2020

Revenue

27,761

12,680

63,383

36,691

Cost of Revenue

16,907

7,588

39,940

21,921

Gross Margin

10,854

5,092

23,443

14,770

Gross Margin Percentage

39%

40%

37%

40%

Operating Expenses

Sales and marketing expense

1,673

1,082

4,153

3,285

General and administrative

4,015

1,891

9,339

5,387

Development

115

70

518

178

Share-based compensation

189

162

651

547

Interest expense

1,820

1,099

3,295

3,060

Grant Income

(34)

(57)

Amortization

3,641

1,007

7,131

3,076

Depreciation

460

190

1,041

562

Earn-out settlement loss

1,081

440

1,081

440

Acquisition related compensation

253

506

Foreign exchange loss (gain)

(39)

317

287

549

Acquisition-related, transaction and other expenses

1,415

696

5,093

980

US Payroll Protection Plan

(1,683)

(1,683)

Change in fair value of derivative liability

(25)

8,430

Loss Before Income Taxes

(2,086)

(1,803)

(7,969)

(11,667)

Income tax expense — current

539

213

1,430

772

Deferred income tax recovery

407

(173)

(1,485)

(534)

Net Loss for the Period

(3,032)

$(1,843)

(7,914)

$(11,905)

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 fifteen employee hubs across the world. For more information, visit www.quisitive.com and follow @BeQuisitive.

Quisitive Company Contact
Tami Anders, Chief of Staff
tami.anders@Quisitive.com

Quisitive Investor Contact
Matt Glover and John Yi
Gateway Investor Relations
QUIS@gatewayir.com
949-574-3860

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'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 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.


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