Q4-INC.

Q4 Inc. (TSX:QFOR) (“Q4” or the “Company”), a leading capital markets communications platform, today announced its financial results for the three- and nine-month periods ended September 30, 2021. All amounts are expressed in US dollars unless otherwise stated.

Q4’s capital markets communication platform connects public companies, the buy-side and sell-side across their most critical workflows, namely investor relations, corporate access, research and deal management. The Company powers the capital markets investor relations programs of 2,600 public companies (including customers in the Company’s backlog), including more than 50% of the S&P 500. Q4 also hosts over 13 million investors and sell-side analysts on its platform monthly to learn more about the companies in which they are invested. With this breadth of scale, Q4 has amassed vast amounts of data yielding proprietary insights into the behavior of capital markets participants.

Third Quarter 2021 Financial Highlights

• Delivered revenue of $13.0 million, an increase of 30% from the comparative period in the prior year
• Drove annual recurring revenue as of September 30, 2021 to $50.3 million, increasing 24.8% year over year
• Expanded gross profit margins by 380 basis points year over year to 56.9%
• Adjusted EBITDA² loss of $3.3 million
• Net loss of $4.7 million, or $0.43 per share
• Positive cash flow generated from operating activities of $2.0 million for the three months ended September 30, 2021

Third Quarter and Subsequent to Quarter-End Operational Highlights

• Added 145 new clients in the quarter, now totaling 2,600 customers (including customers in the Company’s backlog) compared to 2,234 customers from the comparative period in the prior year
• Completed successful initial public offering (“IPO”) on October 29, 2021, raising gross proceeds of approximately C$100 million to fund our strategic initiatives
• Launched several new products and services including the Q4 Capital Markets Event Platform for Investor conferences; Q4 Virtual Events Platform for Earnings; and, ESG suite of offerings
• Renewed 3-year partnership with New York Stock Exchange and integrated Business Wire’s innovative NX technology into the Q4 platform

“We are very pleased with our third quarter results,” said Darrell Heaps, CEO of Q4. “Making our debut as a publicly traded company just a few weeks ago, I’m especially proud of where the Company stands today. The momentum we experienced in the third quarter across the business is the result of a rapidly growing base of corporate and investment banking customers who continue to increase the number of products they buy from us, as we continue to bring new and innovative products to market. Our revenue growth, combined with our gross margin expansion and a very healthy balance sheet, leave us well-positioned to aggressively pursue our mission to become the largest capital markets communications platform in the world. Finally, I would like to express my sincere thanks to my tireless team, Q4’s loyal customers and our board for their unflagging support. We look forward to continuing to drive shareholder value over the coming quarters.”

Webcast Information

Q4 will host a webcast to discuss the Company's financial results at 8:30 am ET on Wednesday, November 10, 2021. Participants can register in advance or access the webcast live at https://events.q4inc.com/attendee/490811698 . Supplemental materials will be available at least fifteen minutes prior to the start of the event. A replay of the webcast will be available at investors.q4inc.com shortly after the event concludes.

Audience questions will be taken real-time via the Q4 Platform. Investors can also submit their questions in advance to ir@q4inc.com or via our IR website . We will do our best to respond to your questions either on the webcast, if time permits or shortly thereafter. We appreciate your interest.

Q4's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three-and nine-month periods ended September 30, 2021 will be available on Q4's IR website and will be filed on SEDAR at www.sedar.com .

Third Quarter 2021 Results

Selected Financial Measures

Revenue
		Three Months Ended September 30,										Nine Months Ended September 30,
(U.S. dollars in thousands)		2021		2020		$ Change		% Change				2021		2020		$ Change		% Change
Capital Markets Platform		$12,115		$9,495		$2,620		27.6%				$39,134		$27,625		$11,509		41.7%
Platform Services		869		532		337		63.3%				2,435		1,681		754		44.9%
Other		39		0		39						68		0		68
Total revenue		$13,023		$10,027		$2,996		29.9%				$41,637		$29,306		$12,331		42.1%
Gross profit		$7,405		$5,319		$2,086		39.2%				$23,384		$15,923		$7,461		46.9%
Percentage of total revenue		56.9%		53.0%								56.2%		54.3%

Key Performance Indicators

(U.S. dollars, except ARR which is in millions)		September 30, 2021		September 30, 2020		$ Change		% Change
Annual Recurring Revenue		$ 50.3		$ 40.3		$10.0		24.8%
Average Revenue Per Account		$18,120		$17,246		$874		5.1%

Non-IFRS Metrics

	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2021	2020			2021	2020
Adjusted EBITDA	$(3,258)	$(1,361)			$(10,246)	$(3,289)
Free Cash Flow	$1,898	$1,900			$(7,823)	$(3,296)

Results of Operations

The following table outlines our consolidated statement of loss and comprehensive loss for the three and nine months ended September 30, 2021 and 2020:

	Three Months ended September 30,							Nine Months ended September 30,
(U.S. dollars in thousands)		2021			2020				2021			2020
Revenue	$	13,023		$	10,027			$	41,637		$	29,306
Direct cost of revenue		5,618			4,708				18,253			13,383
Gross profit		7,405			5,319				23,384			15,923
Operating Expenses
Sales and marketing		4,535			2,921				13,371			8,152
Research and development		2,612			1,485				8,236			4,429
General and administrative		3,739			2,497				13,348			7,221
Depreciation and amortization		996			1,075				3,079			3,112
Foreign exchange (gain) loss		(307	)		70				(141	)		85
Other expenses		10			30				282			92
Total operating expenses		11,585			8,078				38,175			23,091
Loss from operations		(4,180	)		(2,759	)			(14,791	)		(7,168	)
Finance expenses		309			78				749			215
Finance income		(8	)		(8	)			(16	)		(57	)
(Gain) loss on derivative financial instruments		136			97				3,599			290
Loss before income taxes		(4,617	)		(2,926	)			(19,123	)		(7,616	)
Income taxes		63			31				129			104
Net loss		(4,680	)		(2,957	)			(19,252	)		(7,720	)
Other comprehensive income
Foreign exchange gain (loss) on foreign operations		(7	)		30				(21	)		31
Net loss and comprehensive loss	$	(4,687	)	$	(2,927	)		$	(19,273	)	$	(7,689	)
Basic and diluted loss per share	$	(0.43	)	$	(0.33	)		$	(1.88	)	$	(0.85	)
Weighted average number of common shares outstanding - basic and diluted		10,824			9,077				10,236			9,031

Key Balance Sheet Information

(U.S. dollars in thousands)		September 30, 2021		December 31, 2020		$ Change		% Change
Cash and cash equivalents		$15,978		$ 4,576		$ 11,402		249.2%
Total assets		63,997		53,865		10,132		18.8%
Total liabilities		53,224		30,543		22,681		74.3%
Total long-term liabilities		15,499		7,631		7,868		103.1%

Non-IFRS Measures and Reconciliation of Non-IFRS Measures

This press release makes reference to certain non-IFRS measures, including “EBITDA” and “Adjusted EBITDA”. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures and industry metrics are used to provide investors with supplemental measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics, in the evaluation of similar companies. Management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation.

EBITDA and Adjusted EBITDA

We define EBITDA as net loss, adjusted for depreciation and amortization, finance expenses, finance income and income taxes. Adjusted EBITDA is a supplemental measure used by management to assess our financial and operating performance without regards to financing methods or capital structure. Adjusted EBITDA represents EBITDA, adjusted for the following: share-based compensation, unrealized foreign exchange (gain) loss, (gain) loss on derivative financial instruments, and transaction related expenses. We believe EBITDA and Adjusted EBITDA is useful in assessing our operating cash flows as it eliminates the effects of non-cash expenses and one-time or non-recurring items recorded in the statement of operations and comprehensive loss. The Company’s definition of EBITDA and Adjusted EBITDA may be different than similarly titled measures used by other companies. The following table reconciles Adjusted EBITDA to net loss for the periods indicated.

			Three Months ended Sept 30,							Nine Months ended Sept 30,
(U.S. dollars in thousands)	Note			2021			2020				2021			2020
Net loss			$	(4,680	)	$	(2,957	)		$	(19,252	)	$	(7,720	)
Depreciation and amortization				996			1,075				3,079			3,112
Finance expenses	1			309			78				748			215
Finance income				(8	)		(8	)			(16	)		(57	)
Income taxes				62			31				129			105
EBITDA			$	(3,321	)	$	(1,781	)		$	(15,312	)	$	(4,345	)
Other adjustments
Share-based compensation expense	2		$	187		$	188			$	642		$	565
Unrealized foreign exchange (gain) loss				(289	)		135				(23	)		201
(Gain) loss on derivative financial instruments	3			136			97				3,599			290
Transaction related expenses	4			29			0				848			0
Adjusted EBITDA			$	(3,258	)	$	(1,361	)		$	(10,246	)	$	(3,289	)

(1)		Finance expenses are primarily related to interest and accretion of financial liabilities.
(2)		Share-based compensation expense represents non-cash expenditures recognized in connection with the issuance of options under our Legacy Equity Incentive Plan to our employees and directors. Options granted under the Legacy Equity Incentive Plan have become options under our Omnibus Equity Incentive Plan (the “Omnibus Plan”) in connection with the IPO.
(3)		These adjustments represent fair value adjustments relating to outstanding warrants.
(4)		Represents expenses relating to our IPO and include professional, legal, consulting and accounting fees that are non-recurring and would otherwise not have been incurred.

 

Free Cash Flow

Free cash flow represents cash flow from (used in) operating activities less additions to property and equipment. The following tables reconciles our cash flow from (used in) operating activities to Free cash flow:

		Three Months ended Sept 30,							Nine Months ended Sept 30,
(U.S. dollars in thousands)		2021		2020					2021		2020
Cash flow used in operating activities		$2,021		$1,985					$(7,509)		$(2,974)
Additions to property and equipment		(123)		(85)					(314)		(322)
Free Cash Flow		$1,898		$1,900					$(7,823)		$(3,296)

Key Performance Indicators

This press release also makes reference to “Annual Recurring Revenue” or “ARR” and “Average Revenue Per Account” or “ARPA”, which are key performance indicators we use to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different from similar key performance indicators used by other companies. Definitions of these key performance indicators can be found under the heading “Key Performance Indicators” in the Company’s management’s discussion and analysis for the three and nine month period ended September 30, 2021 and 2020.

Forward-Looking Information

This press release may contain “forward-looking information” within the meaning of applicable securities laws. Forward-looking information may relate to our future financial outlook and anticipated events or results and may include information regarding our financial position, business operations, business strategy, growth strategies, budgets, operations, financial results, taxes, dividend policy, plans and objectives and ability to deliver shareholder value. In certain cases, forward-looking statements that are predictive in nature, depend upon or refer to future events or conditions, and/or can be identified by the use of words such as “expect,” “continue,” “anticipate,” “intend,” “aim,” “plan,” “believe,” “budget,” “estimate,” “forecast,” “foresee,” “close to,” “target” or negative versions thereof and similar expressions, and/or state that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances.

Forward-looking information is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions underlying the forward-looking information in this press release may include: our ability to continue investing in infrastructure to support our growth and brand recognition; our ability to continue maintaining and enhancing our technological infrastructure and the functionality of our platform; our ability to develop and implement new product offerings; our ability to capitalize on growth opportunities and implement our growth strategy; our ability to build our market share and enter new geographies; the total addressable market for our products; our ability to retain key personnel; our ability to maintain existing customer relationships and to continue to expand our customers’ use of our platform and products; our ability to maintain existing relationships on similar terms with our current service providers, suppliers, channel partners and other third parties; our ability to maintain and expand our geographic scope; our ability to execute on our expansion plans; our ability to obtain financing on acceptable terms or at all; the impact of competition; the successful integration of future acquisitions; the changes and trends in our industry or the global economy; changes in laws, rules, regulations, and global standards; and that the risks and uncertainties noted below will not materialize.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the following risk factors described in greater detail in the “Summary of Factors Affecting our Performance” and “Financial Instruments and Other Instruments” sections of our most recent management’s discussion and analysis and in the “Risk Factors” section of the Company’s final long form prospectus (the “Prospectus”) dated October 22, 2021 filed in connection with the Company’s initial public offering (“IPO”), which is available under our profile on SEDAR at www.sedar.com . If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date of hereof (or as of the date they are otherwise stated to be made), and is subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

Additional information relating to Q4, can be found on SEDAR under the Company’s profile at www.sedar.com .

About Q4 Inc .

Q4 Inc. (TSX: QFOR) is a leading capital markets communications platform that is transforming the way publicly traded companies, investors and investment banks make decisions to efficiently discover, communicate and engage with each other. The Q4 end-to-end technology platform facilitates interactions across the capital markets through its IR website products, virtual events solutions, capital markets CRM, shareholder and market analytics tools. The firm is a trusted partner to more than 2,600 public companies globally including 50% of the S&P 500. Q4 is based in Toronto, with offices in New York and London. Learn more at q4inc.com

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