VANCOUVER, BC – April 6, 2023 – HS GovTech Solutions Inc. (the “Company” or “HS GovTech”) (CSE:HS) (OTC:HDSLF) (Frankfurt:38H) is pleased to present an update regarding its sales performance and business activities during the quarter ended March 31, 2023 (“Q1”). All financial figures contained herein are expressed in U.S. dollars (“USD”) unless otherwise noted.
The Company is seeing a significant uptick in market demand when compared to the prior three years, which were distorted by the effects of the pandemic. This demand is reflected by both the number of new contracts awarded and signed in the quarter, as well as the number of negotiations that are rapidly approaching final award and contracted status for Q2. At the end of Q1 2023 the Total Contract Value (“TCV”) for agreements that were either fully executed contracts (“Fully Executed”) or agreed to, awarded and out for execution (“Awarded”) was just over $6 million, encompassing 16 agreements, including:
- $1.2 million in new professional services revenue
- $0.84 in net new ARR (Annual Recurring Revenue)
- As at March 31, 2023 ARR stood at $6.15 million
- Once all of Q1’s Awarded activity is Fully Executed, the Company’s ARR will stand at $6.8 million
Notable highlights from the quarter include:
- Three new US states were added to the Company’s geographic footprint: Montana, New Jersey, and Nevada.
- The Company’s first contract in the Code Enforcement space with an agency in Texas. Code Enforcement, which includes building licensing and construction inspections, represents a new market vertical. The agency is implementing a fully integrated platform encompassing both the environment health and the code enforcement departments. Having multiple agencies in a jurisdiction on one platform is a model numerous other jurisdictions are likely to follow in the future.
- An additional agency in California, which continues to be a state with ever increasing demand for HSCloud Suite.
Since the last update March 2nd 2023, HSPay continues to increase in both adoption and volume:
- As referenced in the March 2nd updated, Total Processed Volume (“TPV”) in Q1 2023 exceeded all of 2022 total processing volume
- The average TPV has increased from $75,000 per week to $87,000 per week exiting Q1 – a $12,000 per week increase from the beginning of March
- These averages do not fully reflect new agencies that onboarded towards the end of the quarter
- 10 new HSPay customers are slated for Q2 go-live as of the start of the quarter, the largest number of known scheduled go-lives at the onset of a quarter since HSPay’s inception
12 customers taken live in period with continued operational efficiency in delivery
In the Company’s year-end update dated December 12th 2022, the Company discussed operational efficiencies which markedly improved the speed of delivery as measured by customer go-lives. The Company reported 27 go-lives for 2022, including 11 in Q4-22. In Q1 of 2023, the Company took 12 customers live, the strongest quarterly performance to-date in Company history. This delivery record was accomplished without any net new positions being added during the period; in fact, gross annual payroll was reduced in Q1 as previously mentioned in the March 2nd update.
Chief Executive Officer, Silas Garrison, commented “I am very delighted with this quarter and how the year is shaping up. Net new ARR was significant, and the number of customer go-lives was truly record setting. Sales volume and overall deal development is shaping up such that we could see us closing more than $20 million in TCV by year end 2023, which would see the company with over $9 million in ARR under contract and awarded as we exit the year.”
Mr. Garrison continued “While exciting, it is even more exciting to see the number of successful go-lives occurring. When it comes to successful scale in an organization, there are three ‘Ps’ that need to be in sync: People, Processes and Platforms. I am pleased to say, we are executing well on all three. While I say it often, I am continually honored and humbled by the growth and commitment of our team. Our processes have been refined such that our team can operate at maximum efficiency; and our platform, which we utilize daily to deliver for our customers, continues to mature in innovative ways that save us time with each delivery cycle. Efficiency of go-lives is a crucial metric for the Company to achieve having an EBITDA positive run rate exiting 2023. As of the end of Q1, we continue to be on target to reach this important milestone.”
The Company also announces that it will issue 292,500 incentive stock options and 2,207,500 RSU’s to Employees, Officers, Directors and an IR representative of the Company. The options will have a strike price of CA$0.40 and expire three years from the date of grant.
ARR is a non-IFRS measure that provides an indication of the subscription revenue from customers that is expected from continued usage per the term of contract signed, and as such management believes ARR to be a meaningful measure for assessment of Company performance. Key assumptions related to ARR figures are from continued usage of the services over the life of the agreement, with the calculation based on the annual average of subscription revenues over the life of the agreement.
HS GovTech Solutions Inc.
HS GovTechTM is an industry leading software as a service company serving the state, provincial and local government market across the United States and Canada. HS GovTech’sTM cutting edge platforms currently provide inspection, information, communication and data management systems that enable government agencies to operate more efficiently. HS GovTech’sTM cloud and mobile based platforms are currently deployed in over 800 state and local government organizations across North America. HS GovTechTM currently offers the only fully integrated inspection, administration and analytics product suite across all platforms in North America. HS GovTechTM also delivers its government grade technologies to private businesses through its My Health DepartmentTM platform, enabling citizens and private businesses to gain visibility and predictability into their own organizations and move from a reactive to a proactive operational status. As HS GovTechTM continues to deliver focused service and innovative solutions to government organizations, the Company entered the FinTech space through its HSPayTM offering which serves as a payment platform that streamlines the intake of government revenue. Further, HS GovTech’s GovCallTM platform offers one of the only teleconferencing and video collaboration platforms tailored exclusively for government agencies.
This release may contain forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Although HS GovTechTM believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. HS GovTechTM expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
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