QUIS Quisitive Technology Solutions Inc

Quisitive Technology Solutions Inc. (“Quisitive” or the “Company”) (TSXV: QUIS, OTCQX: QUISF), a premier Microsoft Cloud and AI solutions provider, today reported financial results for the full year ended December 31, 2023.

Management Commentary"In recent months, we've successfully executed two major divestitures, significantly streamlining Quisitive's operations and sharpening our focus on our core mission as a premier provider of Microsoft Cloud and AI solutions," said Quisitive CEO Mike Reinhart. "The divestiture of our payments division has removed financial constraints, allowing us to reallocate growth enabling resources to our Cloud operations. The foundational strength and competitive edge of Quisitive is our deep partnership with Microsoft. To bolster our position as a leader in cloud and AI solutions, we have been collaborating with Microsoft to develop AI go-to-market strategies and service offerings. We expect these initiatives to begin producing revenue within the next twelve months, driven by expanding momentum in the AI market for these offerings."

"Admittedly the IT industry for professional services was challenging in 2023, but we responded quickly by reducing our workforce, shifting our revenue mix towards recurring services, and identifying new growth opportunities in AI and data. These strategic changes resulted in gross margins that exceeded the industry average, reaching 43% in the latter half of 2023, and have effectively positioned Quisitive for future growth. With a streamlined organization, a deleveraged balance sheet, and a strengthened leadership team in place, we are well-positioned to drive organic growth and enhance shareholder value in the coming year and beyond."

Full Year 2023 Financial ResultsThe Company’s condensed consolidated financial statements for the full year ended December 31, 2023 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.sedarplus.com. All figures are expressed in United States dollars unless otherwise stated.

• Revenue from continuing operations was $121.2 million compared to $137.8 million for the full year ended December 31, 2022. The decline was driven by reduced market demand for professional services revenue and the Company’s corresponding reduction in revenue-generating headcount.
• Gross profit from continuing operations as a percentage of revenue increased to 40.2% compared to 39.8% for the full year ended December 31, 2022.
• Gross profit from continuing operations was $48.8 million compared to $54.8 million for the full year ended December 31, 2022.
• Adjusted EBITDA from continuing operations was $13.0 million compared to $15.5 million for the full year ended December 31, 2022. Pro Forma Adjusted EBITDA (as if the divestures of BankCard and PayiQ (which were completed in January and April 2024, respectively) closed on January 1, 2023) was $16.4 million for the full year ended December 31, 2023, or 14% of revenue.  
• The Company’s total senior debt to Adjusted EBITDA ratio was 3.04:1.00 at December 31, 2023. Following the close of the sale of Bankcard and the Company’s amended and restated credit agreement, the Company’s total senior debt to Adjusted EBITDA ratio is approximately 2.1:1.0.

Fourth Quarter and Full Year 2023 and Recent Operational Highlights

• Appointed Dan Kunz as Executive Vice President of Microsoft Cloud and AI Global Delivery Organization
• Announced and completed the sale of BankCard USA
• Announced the upcoming launch of MazikCare copilot and previewed at the 2024 HIMSS Conference
• Participated alongside Microsoft at the 2024 HIMSS Conference
• Awarded the AI and Machine Learning in Microsoft Azure Specialization
• Announced and completed the sale of PayiQ
• Recognized as the 2023 Solution Partner of the Year by Board International at the Board Americas Partner Summit for its outstanding channel marketing collaboration and introduction of the Microsoft Dynamics 365 Trial Balance Extractor solution to Board
• Announced the appointment of two new directors to the board of directors
• Collaborated with Microsoft to leverage new healthcare data solutions in Microsoft Fabric for Ontario Workers Network, the Ottawa Hospital, and other hospitals in the network

Capitalization Table

		Shares
Current Outstanding Shares (As of April 29, 2024)		275,924,122(1)
RSU/DSU and Stock Options		17,739,137
Fully Diluted Shares		293,663,259

Note:(1) Reflects the cancellation of 133,095,168 common shares of Quisitive following the completion of the sale of BankCard.

Fiscal Year 2024 GuidanceQuisitive is providing the following guidance for fiscal year 2024:

	Low (US$)	High (US$)
Fiscal Year 2024 Revenue	123,000,000	137,000,000
Fiscal Year 2024 Pro Forma Adjusted EBITDA	15,000,000	18,000,000

Pro Forma Adjusted EBITDA further adjusts Adjusted EBITDA for the impact of (i) certain cost savings realized by the continuing operation following the divestitures of PayiQ and Bankcard, and (ii) headcount reductions made in response to market demand during the year ended December 31, 2023 as if the savings from those reductions had been realized as of January 1, 2023, offset by the removal of the benefit of variable compensation recognized during the year.

The Revenue and Pro Forma Adjusted EBITDA for fiscal year 2023 is based on the assumption that both the sale of PayiQ and BankCard, which were completed in January and April 2024, respectively, were finalized on January 1, 2023. This calculation only includes outcomes for the remaining Cloud segment and corporate expenses. For fiscal year 2024, the Revenue and Pro Forma Adjusted EBITDA projections also assume the completion of the sale of PayiQ and BankCard on December 31, 2023, focusing solely on financial forecasts for the remaining Cloud segment and corporate costs.

Quisitive Reaffirms Strategic RoadmapQuisitive reaffirms its strategic commitment to refocus its corporate vision to capitalize on the expanding opportunities emerging from AI advancements, enabled by the Microsoft Cloud. Leveraging a rich legacy of integrating both custom and proprietary technologies for transformative results, Quisitive is set to innovate further in its service offerings by enhancing its AI capabilities. This includes developing more intuitive and predictive solutions tailored to meet the varied needs of its broad clientele across all sectors. Building on its robust foundation in cloud solutions and its partnership with Microsoft, Quisitive is determined to lead the market in creating customized AI-driven solutions. These solutions aim to not only boost operational efficiencies for its customers but also forge new avenues for growth and competitive advantage in a rapidly evolving digital landscape.

Conference CallQuisitive management will hold a conference call today (April 29, 2024) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

Company CEO Mike Reinhart and CFO Scott Meriwether will host the call, followed by a question-and-answer period.

Toll Free dial-in: 1-877-704-4453International dial-in: 1-201-389-0920Webcast Link: Here

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.

A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time today and will expire after Monday, May 13, 2024.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Replay ID: 13746060

For additional information, please visit the Investor Relations section of Quisitive’s website at: https://quisitive.com/investor-relations/.

The following tables summarize results for the three months and full year ended December 31, 2023 and 2022:

	Three Months Ended								Year Ended
	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Revenue	$	28,410			$	32,420			$	121,224			$	137,764
Cost of Revenue		16,340				19,662				72,435				82,966
Gross Margin		12,070				12,758				48,789				54,798
		42	%			39	%			40	%			40	%
Operating Expenses
Sales and marketing expense		3,265				2,879				12,576				11,805
General and administrative		6,458				6,497				23,829				27,511
Development		103				117				435				434
Share-based compensation		694				751				3,904				3,325
Interest expense		1,909				1,496				6,759				4,620
Amortization		2,116				2,080				7,767				8,258
Earn-out settlement loss		-				3,750				-				5,228
Acquisition related compensation		-				620				638				2,772
Depreciation		266				302				1,076				1,287
Foreign exchange loss (gain)		201				35				255				(219	)
Acquisition-related, transaction and other expenses		1,006				272				3,171				688
Other expense (income)		71				(225	)			(24	)			(241	)
Net Loss from continuing operations before income taxes	$	(4,019	)		$	(5,816	)		$	(11,597	)		$	(10,670	)
Income tax expense — current		(660	)			300				1,202				2,132
Deferred income tax expense (recovery)		1,216				(75	)			2				(1,928	)
Net Loss from continuing operations	$	(4,575	)		$	(6,041	)		$	(12,801	)		$	(10,874	)
Discontinued Operations
Profit (loss) from discontinued operations, net of tax		(80,426	)			934				(79,485	)			1,596
Net Loss for the Period	$	(85,001	)		$	(5,107	)		$	(92,286	)		$	(9,278	)

	Three Months Ended December 31,									Year Ended December 31,
		2023				2022					2023			2022*
Net loss for the period	$	(85,001	)		$	(5,107	)		Net loss for the period	$	(92,286	)		$	(9,278	)
Loss (income) from discontinued operations, net of tax		80,426				(934	)		Loss (income) from discontinued operations		79,485				(1,596	)
Net loss from continued operations		(4,575	)			(6,041	)		Net loss from continued operations		(12,801	)			(10,874	)
Deferred income tax recovery		556				225			Deferred income tax expense		1,204				204
Transaction related expenses		1,006				272			Transaction related expenses		3,172				687
Foreign exchange		201				35			Foreign exchange		254				(220	)
Depreciation		266				302			Depreciation		1,076				1,289
Amortization		2,116				2,080			Amortization		7,768				8,258
Interest		1,909				1,496			Interest		6,759				4,620
Share-based compensation		694				751			Share-based compensation		3,903				3,325
Acquisition related compensation		-				620			Acquisition related compensation		638				2,772
Earn-out settlement loss		-				3,750			Earn out settlement loss		-				5,228
Gain/loss on asset sale		48				-			Gain/loss on asset sale		48				(9	)
Other expense (income)		499				(225	)		Other income		515				(197	)
Development		103				117			Development		435				434
Adjusted EBITDA	$	2,823			$	3,382			Adjusted EBITDA	$	12,971			$	15,517
Adjusted EBITDA as a percentage of revenue		10	%			10	%		Adjusted EBITDA as a percentage of revenue		11	%			11	%
Revenue	$	28,410			$	32,420			Revenue	$	121,224			$	137,764

	Year ended December 31, 2023
Adjusted EBITDA	12,971
Reductions in headcount within continued operations, inclusive of wages and benefits	4,180
Remove benefit to variable and incentive compensation recognized during year	(1,166	)
Specific impacts from divestiture of Payments Solutions segment - reduced corporate insurance and increased licensing	436
Pro Forma Adjusted EBITDA	16,421
Pro Forma Adjusted EBITDA as a percentage of revenue	14	%

About Quisitive:Quisitive (TSXV: QUIS, OTCQX: QUISF) is a premier, global Microsoft partner leveraging the power of the Microsoft cloud platform and artificial intelligence, alongside custom and proprietary technologies, to drive transformative outcomes for its customers. The Company focuses on helping enterprises across industries leverage the Microsoft platform to adopt, innovate, and thrive in the era of AI. For more information, visit www.Quisitive.com and follow @BeQuisitive.

Quisitive Investor ContactMatt Glover and John YiGateway GroupQUIS@gateway-grp.com 949-574-3860

Tami AndersChief of Stafftami.anders@quisitive.com972.573.0995

Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA

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, 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, and earn-out settlement losses.

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 is a non-GAAP financial measure and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA 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 does have limitations as, 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

This news release contains certain “forward‐looking information” and “forward‐looking statements” (collectively, “forward‐ looking statements”) within the meaning of applicable Canadian securities legislation regarding Quisitive and its business. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward‐looking statements. Forward‐ looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward‐looking statements. These forward-looking statements include, but are not limited to, statements relating to: the anticipated benefits of the sale of PayiQ and BankCard to Quisitive and its shareholders; the future growth potential of the Company and its cloud solutions business; the financial outlook of the Company following the divestitures of PayiQ and BankCard, including growth projections, capital allocation and cost savings;, potential for growth and expectations regarding the Company’s ability to capitalize on the expanding opportunities emerging from AI advancements.

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: the expected results from the completion of the sale of BankCard; fluctuations in general macroeconomic conditions; fluctuations in securities markets; the ability to realize on cost saving measures; the Company’s limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the technology industry; unproven markets for the Company’s product offerings; lack of regulation and customer protection; the need for the Company to manage its future strategic plans; the effects of product development and need for continued technology change; protection of proprietary rights; network security risks; the ability of the Company to maintain properly working systems; foreign currency trading risks; use and storage of personal information and compliance with privacy laws; use of the Company’s services for improper or illegal purposes; global economic and financial market conditions; uninsurable risks; changes in project parameters as plans continue to be evaluated; and those factors described under the heading "Risks Factors" in the Company's annual information form dated May 23, 2023 available on SEDAR+ at www.sedarplus.ca. 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.

This news release also contains future-oriented financial information and financial outlook information (together, “FOFI”) about the Company’s prospective results of operations, including statements regarding expected pro-forma Adjusted EBITDA following the completion of the sale of BankCard. FOFI is subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraph. The Company has included the FOFI to provide an outlook of management’s expectations regarding the Company on a post-Transaction basis and other anticipated activities and results, and such information may not be appropriate for other purposes. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s reasonable estimates and judgements; however, actual results of operations and the resulting financial results may vary from the amounts set forth herein. Any financial outlook information speaks only as of the date on which it is made and the Company undertakes no obligation to publicly update or revise any financial outlook information except as required by applicable securities laws.

Neither the 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.