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VQSLF: Leveraging an Industry Transitions to AI

By M. Marin



VIQ Solutions (OTC:VQSLF) (TSX:VQS) operates a secure technology platform that offers artificial intelligence (AI) enabled video capture software and audio recording with voice-to-text capabilities. Speech recognition is an underlying foundation of the VIQ AI-enabled transcription platform. The company is focused on highly compliant, security-focused and regulated markets. VIQ, customers can obtain higher volume per worker and lower unitary cost and production time, according to management.

Affordable devices that enable the collection of significant volumes of audio and video information are expected to drive new opportunities for VIQ. The volume of data continues to grow with rising data capture from audio and video devices, next generation of intelligent microphones, sensors, body cameras, drones and smartphones, among other devices. Management believes that as this trend continues, pressure to transform data to documents and transcripts digitally leveraging AI technology will mount.

VIQ began to transition toward a SaaS (software as a service) and AI revenue model that provides services to customers on a recurring monthly fee basis based on VIQ’s average customer contract length of 5+ years.

Moreover, the company has implemented a roll-up strategy to drive growth. VIQ acquired three companies in 2018 – Net Transcripts, Transcription Express and HomeTech -- and has several others under review. These were accretive acquisitions that expanded VIQ’s customer base, adding 450 customers and the increased opportunity to cross sell the company's platform and services.

The backdrop of industry transition could imply a positive tailwind for the company's growth strategy. Market research firm estimates the speech and voice recognition market at $7.8 billion in 2018, and predicts that it will reach $21.5 billion by 2024, representing a 19.2% CAGR. The expected transition to digital transcription is also supported by data from the Bureau of Labor Statistics, which notes that "Technological advances have changed the way … transcription is done [with] speech recognition" and other advances."

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