Source: Quarterhill Inc.
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  • Quarterhill (QTRH) has announced financial results for its second quarter ended June 30, 2022
  • Revenue for the three and six months ended June 30, 2022, was C$43.9 million and C$212.4 million, compared to C$18.9 million and C$38.2 million the year prior
  • Gross margin for the three and six months ended June 30, 2022, was 13 per cent and 46 per cent, compared to 18 per cent and 26 per cent the year prior
  • The company expects its top line and margin performance to improve as numerous new project awards come in over the next few quarters
  • Quarterhill offers solutions in intelligent transportation systems and intellectual property licensing
  • Quarterhill Inc. (QTRH) is down by 6.42 per cent trading at $2.04 per share

Quarterhill (QTRH) has announced financial results for its second quarter ended June 30, 2022.

Revenue for the three and six months ended June 30, 2022, was C$43.9 million and C$212.4 million, compared to C$18.9 million and C$38.2 million the year prior. ITS revenue has increased in 2022 primarily due to the acquisition of ETC in September 2021. WiLAN’s revenue increased in Q2 and year-to-date due to stronger license activity, which reflects its strong cash flow generating potential. The strategic review process for WiLAN remains ongoing. Including Q3, the company’s ITS business has signed over US$345 million in contracts in the past 18 months.

Gross margin for the three and six months ended June 30, 2022, was 13 per cent and 46 per cent, compared to 18 per cent and 26 per cent the year prior. Gross margin in the ITS segment was 15 per cent in Q2 2022, compared to 37 per cent in Q2 2021. ITS margins reflect the addition of the ETC business.

Licensing gross margin in Q2 2022 was negative 3 per cent compared to negative 177 per cent in Q2 2021. Licensing gross margin is 60 per cent year-to-date compared to negative 12 per cent in the same period last year.

Operating expenses for the three and six months ended June 30, 2022, were C$37.4 million and C$59.2 million, compared to C$12.2 million and C$24.7 million in the same periods last year. These figures include a one-time C$14.6 million charge to settle litigation and arbitration disputes with the former owners of VIZIYA. The increase is also attributable to expenses from the ETC acquisition and inflationary pressures on materials and personnel.

Consolidated adjusted EBITDA for the three and six months ended June 30, 2022, was negative C$9 million and C$70.1 million, compared to negative C$3.2 million and negative C$3.4 million in the prior year. Consolidated adjusted EBITDA in Q2 2022 decreased YoY due primarily to a greater portion of ITS revenue coming from implementation-stage projects, lower revenue due to implementation delays on certain ITS projects, and the higher cost of materials and personnel due to inflation. Consolidated adjusted EBITDA year-to-date increased YoY due to a strong Q1 2022 performance from the licensing business.

Net income (loss) for the three months ended June 30, 2022, was (C$23.8) million, or (C$0.21) per diluted share, compared to (C$6.4) million, or (C$0.06) per diluted share, in the same periods last year.

Net income (loss) for the six months ended June 30, 2022, was C$33.1 million, or C$0.25 per diluted share, compared to (C$10.7) million, or (C$0.09) per diluted share, in the same periods last year.

Cash generated from (used in) operations for the three and six months ended June 30, 2022, was C$77.8 million and C$68.6 million, compared to C$1.7 million and (C$4.1) million in the prior year. Cash and cash equivalents were C$122.9 million as of June 30, 2022, compared to C$72.6 million as of December 31, 2021. Working capital as of June 30, 2022, was C$138.1 million, compared to C$105.1 million as of December 31, 2021.

The company expects its top line and margin performance to improve as numerous new project awards come in over the next few quarters.

It will pay an eligible quarterly dividend of C$0.0125 per common share on October 7, 2022, to shareholders of record as of September 9, 2022.

“Q2 was a mixed quarter with revenue more than doubling, expected revenue backlog in the ITS segment reaching a record level of US$573 million and our cash on the balance sheet growing to more than C$120 million. At the same time, the slower ramp with certain ITS project implementations and delays in new contract awards continued to persist, which impacted the quarter’s overall level of revenue growth and margin performance,” said Bret Kidd, CEO at Quarterhill.

“The factors impacting project implementations were primarily shifts in customer priorities and preferences that can occur in the early stages of a large infrastructure project, labour scarcity and supply-chain disruptions. Fortunately, we saw some of these factors begin to abate towards the end of the quarter with resultant progress seen with certain key implementations,” he added.

Quarterhill offers solutions in intelligent transportation systems and intellectual property licensing.

Quarterhill Inc. (QTRH) is down by 6.42 per cent trading at $2.04 per share as of 10:03 am EST.


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