Toronto-based investor relations (IR) software company Q4 Inc. posted revenue growth and a much lower net loss in the first quarter of this year.
According to the company’s Q1 2022 earnings report, which was released today, Q4 Inc. pulled in $13.9 million USD in revenue, a 23 percent rise year-over-year compared to the $11.3 million it generated in Q1 2021.
Q4 Inc. also more than halved its net losses, year-over-year. In the first quarter of this year, the company reported a net loss of $6.6 million, or $0.17 per share, a far cry from the $13.5 million it lost during the same period in 2021.
“Our performance for the first quarter highlights the durability and agility of our business model.”
-Darrell Heaps, Q4 Inc.
Q4 Inc. founder and CEO Darrell Heaps said these results are “directly correlated” to Q4 Inc’s investments in its tech platform and focus on selling to its established customer base. He also highlighted the customer expansion sales growth the company experienced, alluding to how Q4 Inc. has increased the number of products its existing customers are using.
“Our performance for the first quarter highlights the durability and agility of our business model,” said Q4 Inc. founder and CEO Darrell Heaps. “While top line and bottom line results were in line with our expectations, we were especially excited to see the record increase in customer expansion sales and controllable client retention.”
Q4 Inc, which trades on the Toronto Stock Exchange (TSX) as ‘QFOR,’ offers a capital markets communications platform. Through its software, which boasts a list of clients that includes Netflix, Visa, McDonald’s, Walmart, Square, Shopify, and Nike, the company aims to help public companies better understand their performance and engage with investors.
So far, markets have reacted unfavourably to these results. Following the release of Q4 Inc’s Q1 2022 earnings report this morning, the company’s stock has dropped about 15 percent from its opening price of $5 CAD this morning, and is trading at $4.24 per share at time of publication.
The company’s Q1 financial results come shortly after Q4 Inc. announced the departure of CFO Ryan Levenberg, who will be resigning from his role by the end of May. Q4 Inc. COO Donna de Winter will assume the role of interim CFO.
Q4 Inc. has seen significant growth during COVID-19, fuelled by tailwinds associated with the pandemic-driven shift to virtual, the health of North America’s public markets, and its January 2020 acquisition of S&P Global Market Intelligence’s IR web hosting business.
The company went public last year as part of wave Canadian tech initial public offerings (IPOs), raising $100 million through its TSX IPO, citing plans to focus on mergers and acquisitions (M&A) to fuel its growth. Q4 Inc. began trading in October 2021 at a price of $11.52 CAD per share, reaching a high of $12 before dropping to just over a third of that amount today.
The company has been impacted by a broader tech stock selloff that has also hurt other high-growth, unprofitable publicly-traded Canadian tech companies. This environment has been fuelled by a combination of factors, including rising inflation, interest rates, and Russia-Ukraine-related tensions.
Heaps downplayed any concerns about the company’s outlook in an interview with BetaKit last year, pointing to sizeable growth opportunities. Following the release of Q4 Inc’s full-year 2021 results, Heaps hailed the strength of the company’s organic growth in 2021 and the M&A opportunities it faces as further reason to be optimistic.
Q4 Inc’s first-quarter 2022 revenue increase represents an improvement compared to the 20 percent rise the company saw during Q4 2021, when it generated $13.8 million USD in revenue, capping off what Heaps called “an exciting year” for its business. Q4 Inc’s net loss was also slightly larger in Q1 2022 than the previous quarter, when the company lost $6.3 million.
During the second half of 2022, Heaps said Q4 Inc. expects the company’s material investments to tail off, and the firm to realize “greater leverage and accelerating revenue growth as [Q4 Inc. executes] on its growth and path to profitability strategy.”
Feature image courtesy Q4 Inc.