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Welcome to the Voxtur Q3 2022 Earnings Call. My name is Richard, and I'll be your operator for today's call. [Operator Instructions] As a reminder, the conference is being recorded. I'll now like to turn the call over to Mr. Jordan Ross, Chief Investment Officer. Jordan, you may begin.
Good morning, everyone. Thank you for joining us for the Voxtur third quarter earnings call, where we will discuss our financial results for the period ended September 30, 2022. Please note that our results were released November 29, 2022, after the market closed and can be accessed on ADAR or on our website at Voxtur.com. Joining me today are Executive Chairman, Gary Yeoman; CEO, Jim Albertelli; and CFO, Angela Little.
We will begin with prepared remarks and then move into a Q&A. If we are unable to get to your questions, you are always welcome to contact directly at SEDAR and voxtur.com. Angela Little will begin by reviewing our financial results. After that, Gary Yeoman and Jim Albertelli will provide updates as to how we are progressing towards our objectives through capital markets activities, organic growth initiatives, and operational efficiencies. Before we get started, please be advised that the information that we will share on this call may contain forward-looking statements. We caution you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in our expectations.
Further, on today's call, we will report using both IFRS and non-GAAP financial measures. We use these non-GAAP financial measures internally for financial and operational decision-making purposes as we believe that they provide a meaningful measure of financial performance and valuation. These non-GAAP financial measures are presented in addition to and not as assessed financial measures calculated in accordance with IFRS. To see the reconciliation of these non-GAAP measures, please refer to our press release distributed yesterday, November 29, 2022, and our management's discussion and analysis, both of which are availed on sedar.com and on our website at voxtur.com. A replay of today's call will also be posted on our website. Finally, please note that all references to amounts or currency during today's call are in Canadian dollars unless otherwise stated. I will now turn the call over to our CFO, Angela Little.
Thank you, Jordan. Good morning, everyone, and thank you for joining us today. To start, I will provide a high-level summary of market conditions impacting Q3 and then provide a summary of our third quarter performance. Gary and Jim will go into more detail about the impact of the current macroeconomic conditions on the company as well as the strategy for the remainder of 2022 and 2023. Q3 2022 continue to be a challenging environment for the U.S. housing and mortgage market. Interest rates increased by 75 basis points twice during the quarter, with the September increase marking the fifth rate hike of 2022, resulting in mortgage rates peaking in September and October at 7-plus percent.
At the end of October, the Mortgage Bankers Association published year-over-year origination data showing purchase origination volumes down 27% year-over-year and refinance volumes down 77% year-over-year. Additionally, default rates remain historically low, ending the quarter with total delinquencies at 0.69%. In November, the Federal Reserve raised rates of 6x. However, with recent news indicating inflation may have peaked the last few weeks have reflected slightly reduced mortgage rates and a slight increase in mortgage applications. Despite this year-over-year mortgage loan applications remain down over 40% and are not expected to increase significantly in the near term as many buyers and sellers remain on the sidelines waiting to see when and where conditions will level out. With these conditions in mind, we are focused on controllable factors and continue to prioritize positive cash flow, positive adjusted EBITDA and investments based on areas we believe will provide the greatest long-term benefits for our shareholders. I will now provide a brief summary of the Q3 results. For the third quarter, Voxtur's gross revenue was $35 million. Gross profit was $13.6 million, and adjusted EBITDA loss was $1.4 million. Year-to-date 2022, Voxtur's gross revenue is $114 million, gross profit is $40 million and adjusted EBITDA loss of $8.3 million.
Revenue for Q3 2021 reflects a 44% increase over Q3 2021 and year-to-date 2023 revenue reflects a 100% increase over year-to-date 2021. Gross profit for Q3 2022 reflects a 42% increase over Q3 2021 and year-to-date 2022 gross profit reflects a 60% increase over year-to-date 2021. Comparing Q3 2022 to Q2 2022, revenue for Q3 decreased only 6% over Q2, even with the significant reduction in origination volumes. This is a direct result of our robust sales efforts, increasing market share in many key areas. By way of example, revenue for our valuation business decreased only 2% from Q2 to Q3 2022. Gross profit margin increased from 33% in Q2 2022 to 38% in Q3 2022. This is a direct result of an increase in SaaS revenue from valuation technology and decreases in direct operating expenses. Finally, the company ended Q3 2022 with cash and cash equivalents of approximately $29 million. For Q3 and year-to-date 2022, approximately 95% of gross revenue came from U.S. revenue sources. This is up from 91% in Q3 '21 and 89% per year-to-date '21, reflecting the company's continued expansion into the U.S. market from strategic acquisitions. Revenue from software and data licenses represents approximately 19% of Q3 revenue and 17% of year-to-date revenue. This is an increase from 10% in Q3 '21 and 14% year-to-date '21.
We expect this trend to continue as we further integrate the Blue Water business. Turning to acquisitions. The company completed 2 strategic acquisitions in Q3. MTE was completed in July, and Blue Water Financial Technologies was completed in September. Gary will be discussing these in detail, including the synergistic opportunities and expansion into the capital markets. In connection with the Blue Water acquisition, Voxtur expanded its credit facility with the Bank of Montreal. Then in October, the company completed a preferred share offering with BMO Capital Markets, evidencing a strong partnership between Voxtur and BMO. Finally, and then further supported this point, BMO recently updated the company's loan covenants to reflect the changing market conditions, which have impacted original Q4 projections. BMO has provided a waiver for Q3 loan covenants and continues to work in partnership with Voxtur as we navigate these unprecedented market conditions. I will now turn to the company's 2022 financial guidance. As we end 2022 and go into 2023, management's expectation is that market conditions will remain challenging. Based on current conditions and related Q4 projections, we are reducing our revenue guidance to a range of $140 million to $150 million based on revenue streams included in the original guidance.
Although we are updating our guidance, the company remains laser-focused on positive cash flow, positive adjusted EBITDA and increased revenue from key products, synergistic revenue opportunities from completed acquisitions, and increased market share. As we reported at Q2, the company remains focused on efficiencies and cost reductions, having executed additional cost reductions in Q3. We remain vigilant in these efforts and nimble in order to make necessary adjustments as market conditions evolve. We will continue to rightsize as needed while remaining focused on efficiencies, synergies, consolidation and process improvements. In this manner, management is looking at opportunities to shift to variable cost models where possible to allow for more flexibility and timely adjustments to market changes. With regard to strategic new products, the company has onboarded or is in the process of actively onboarding 12 new clients for our Voxtur AOL product and has already begun recognizing revenue for Q4. We also anticipate new revenue from tax products in the Canadian market in early 2023 as well as the gradual return of default-driven products. I will now turn the call over to our Executive Chairman, Gary Yeoman.
Thank you, Angela. Good morning, everyone, and thank you for joining us. I want to begin by reemphasizing that our focus remains on leveraging our data assets through various software platforms as the foundation for reducing cost and inefficiencies in real estate transactions, ultimately making homeownership more affordable. We are proud of the advances we have made thus far, but we still have a long way to go. In the meantime, I'm pleased to discuss a few noteworthy successes from the capital markets prior to turning it over to Jim to discuss operational highlights.
Early in the quarter, the company closed the acquisition of municipal tax equity Consultants and MTE Pair Legal Professional Corporation, which allows for the consolidation of our largest competitor in Ontario, offering property tax analytics and municipalities throughout the country and more specifically in Ontario. This acquisition allows us to scale the rollout and adoption of our real property tax analytics platform. It also contributes positive EBITDA individually and incrementally and allows for additional cost synergies within our Property Tax business. Near the end of the quarter, the company closed the acquisition of Blue Water Financial Technologies. Blue Water is a leading provider of digital solutions to mortgage investors and lenders in the U.S. Specifically, Blue Water provides solutions for mortgage asset valuation and pricing, mortgage asset trading and distribution, and mortgage advisory and hedging. Voxtur acquired the Blue Water business to diversify revenue streams from the primary mortgage market, add an EBITDA and cash flow positive business and create opportunity for new revenue streams for Voxtur's core products and data assets.
Blue Water staff-based solutions allow mortgage originators and investors to review their portfolios, analyze transactional data in real-time, which is of the utmost importance in these market conditions. Al Qureshi, the founder of Blue Water has joined Voxtur as the President of our Capital Markets and secondary mortgage market business. Also in connection with the acquisition, Al and the Blue Water team have become shareholders of the company. It is important to note that the stock issued in consideration for the acquisition will be issued in installments over 16 quarters following the transaction's closing. We believe this transaction will be transformational for the company, both financially and as we continue our path to becoming a pure-play technology provider for the North American mortgage market. Lastly, I want to acknowledge and thank our partner, BMO Financial Group for continuing to believe in our vision, which allowed us to close the Blue Water acquisition. We are all working hard to integrate our acquisitions with current Voxtur technologies to create innovative solutions at new clients and expand wallet share with existing clients and leverage cost synergies. I'll now turn it over to our CEO, Jim Albertelli.
Thank you, Gary. Good morning, everyone, and thank you for joining us. Before I discuss operational highlights, I would like to start by acknowledging that from a financial results perspective, this is certainly not where any month thought we would be at the end of the third quarter. However, I am extremely proud of our team and what we have accomplished in the face of current market conditions. More specifically, I am proud of how we have come together to find innovative solutions for our clients and outperform our competitors to increase market share.
Although we are relatively flat from a financial growth perspective, I consider it a success, especially compared to our peers, most of whom have seen revenue decreases of more than 50%. With unprecedented macroeconomic conditions and historically high rates, what we have accomplished is no easy feat. I want our shareholders to know that while we remain focused on strategic growth, we are prioritizing the integration and performance of our existing businesses over long-term opportunities. Further, we continue our expense realignment efforts to adapt to market expectations and client demands. As our results will indicate this all lend itself to our focus on gaining EBITDA and cash flow positive. Now I'd like to share our business highlights for the third quarter. First, Voxtur AOL. As you know, AOL was already at Fannie Mae and Freddie Mac approved alternative to traditional title insurance. Now it has also been approved by the VA, the Veterans Administration. This is indicative of the momentum we're seeing in the market, another example of the appetite for change in the title insurance industry. As Agency acceptance continues and more and more lenders engage, Voxtur's goal of creating more affordable homeownership for all Americans becomes more of a reality. We are especially proud of the opportunity we now have to help our beverages in the U.S. Although Voxtur AOL continues to bring new clients and experienced high demand in the market, the ramp-up and implementation processes have taken longer than expected. It is important to note that this is common for a new product and typically requires dedicated resources on client lender side, which has proven difficult in a market where many lenders have been forced to downsize. Despite this, every lender that we've signed continues to forge ahead with implementation. That speaks to the viability of the product and the lender perceived need for an alternative. Additionally, the AOL is now revenue generating, and we are excited to continue to grow and scale with existing and new clients. With respect to the rest of our business lines, as mentioned, we're keeping a close eye on how the market conditions are impacting our clients and adjusting our resources and product road maps accordingly.
Although it may appear that these market conditions are having a negative impact on our business, we are growing our market share by onboarding new clients to recognize the need for more innovative and efficient ways to do business. These clients are turning to Voxtur to protect their largest revenue sources, whether that is a mortgage portfolio or property tax assessment. This market has forced our clients to take pause and review the current processes and technology stack, allowing for a more fruitful environment for Voxtur to add clients. Lastly, I want to conclude by discussing our more recent and most exciting opportunity. Blue Water, it is important to understand that there is a great demand by investors to take a decision on the unprecedented interest rates and investing in and acquiring mortgage servicing rights, or MSRs, as they're known. They are a great way to do so. Blue Water provides access to these investors through real-time pricing and the ability to transfer indulgence assets. The other reality is that many more origin areas don't have the financial means to keep these mortgages on their books and are looking to poor ways to move these assets. Blue Water provides a cost-effective and efficient way to transact these trades. This is exactly what I mean when I say that we are bringing Wall Street to Main Street. Furthermore, Bluewater allows Voxtur to diversify its revenue streams from the primary mortgage market to the secondary mortgage market, create new revenue opportunities by way of a seamless integration and delivery of Voxtur's core solutions such as our attorney opinion letter, our appraisal review product called RACR, our other data products to enhance Blue Water's already powerful trading pricing and due diligence engine in real time. As we navigate this changing environment, our data-driven innovations are proving to be just what our clients need to save consumers money, while increasing shareholder equity. Finally, I want to reemphasize what I have communicated to all our employees and management team. We will ultimately be judged on our performance and not our potential. As a result, we will remain focused on our profits over growth. This is what the current market demands of us, and we will respond accordingly. Thank you for joining us on the call. We appreciate your time and interest, and we're happy to answer any questions you may have at this time. I'll hand it over to the operator to start the Q&A.
Excuse me. It's Gary Yeoman here, operator. I've gotten a number of text back to say that Jim's -- unfortunately, Jim's connection was hard to -- was just -- he couldn't hear probably kept breaking up -- so I'm going to ask everyone if they'll indulge. And I'll just read Gary's speech again so that the opportunity you have clear insight into what Jim has proposed in operations. Unfortunately, and today with technology and that we do have interference from time to time. So I will indulge and I'll get through this again, and hopefully, it will leave any clarity resolved. So before I discuss operational highlights, I would like to start by acknowledging that from a financial results perspective, this is certainly not where any month thought we would be at the end of the third quarter. However, I am extremely proud of our team and what we have accomplished in the face of current market conditions.
More specifically, I am proud of how we have come together to find innovative solutions for our clients and outperform our competitors to increase market share. Although we are relatively flat from a financial growth perspective, I consider it a success, especially compared to our peers, most of whom have seen revenue decreases of more than 50%. With unprecedented macroeconomic conditions and historically high rates, what we have accomplished is no easy feat. I want our shareholders to know that while we remain focused on strategic growth, we are prioritizing the integration and performance of our existing businesses over long-term opportunities. Further, we continue our expense realignment efforts to adapt to market expectations and client demands. As our results will indicate this all lend itself to our focus on gaining EBITDA and cash flow positive. Now I'd like to share our business highlights for the third quarter. First, Voxtur AOL. As you know, AOL was already at Fannie Mae and Freddie Mac approved alternative to traditional title insurance. Now it has also been approved by the VA, the Veterans Administration. This is indicative of the momentum we're seeing in the market, another example of the appetite for change in the title insurance industry. As Agency acceptance continues and more and more lenders engage, Voxtur's goal of creating more affordable homeownership for all Americans becomes more of a reality. We are especially proud of the opportunity we now have to help our beverages in the U.S. Although Voxtur AOL continues to bring new clients and experienced high demand in the market, the ramp-up and implementation processes have taken longer than expected. It is important to note that this is common for a new product and typically requires dedicated resources on client lender side, which has proven difficult in a market where many lenders have been forced to downsize. Despite this, every lender that we've signed continues to forge ahead with implementation. That speaks to the viability of the product and the lender perceived need for an alternative. Additionally, the AOL is now revenue generating, and we are excited to continue to grow and scale with existing and new clients. With respect to the rest of our business lines, as mentioned, we're keeping a close eye on how the market conditions are impacting our clients and adjusting our resources and product road maps accordingly.
Although it may appear that these market conditions are having a negative impact on our business, we are growing our market share by onboarding new clients to recognize the need for more innovative and efficient ways to do business. These clients are turning to Voxtur to protect their largest revenue sources, whether that is a mortgage portfolio or property tax assessment. This market has forced our clients to take pause and review the current processes and technology stack, allowing for a more fruitful environment for Voxtur to add clients. Lastly, I want to conclude by discussing our more recent and most exciting opportunity. Blue Water, it is important to understand that there is a great demand by investors to take a decision on the unprecedented interest rates and investing in and acquiring mortgage servicing rights, or MSRs, as they're known. They are a great way to do so. Blue Water provides access to these investors through real-time pricing and the ability to transfer indulgence assets. The other reality is that many more origin areas don't have the financial means to keep these mortgages on their books and are looking to poor ways to move these assets. Blue Water provides a cost-effective and efficient way to transact these trades. This is exactly what I mean when I say that we are bringing Wall Street to Main Street. Furthermore, Bluewater allows Voxtur to diversify its revenue streams from the primary mortgage market to the secondary mortgage market, create new revenue opportunities by way of a seamless integration and delivery of Voxtur's core solutions such as our attorney opinion letter, our appraisal review product called RACR, our other data products to enhance Blue Water's already powerful trading pricing and due diligence engine in real time. As we navigate this changing environment, our data-driven innovations are proving to be just what our clients need to save consumers money, while increasing shareholder equity. Finally, I want to reemphasize what I have communicated to all our employees and management team. We will ultimately be judged on our performance and not our potential. As a result, we will remain focused on our profits over growth. This is what the current market demands of us, and we will respond accordingly. Thank you for joining us on the call. We appreciate your time and interest, and we're happy to answer any questions you may have at this time. I'll hand it over to the operator to start the Q&A.
[Operator Instructions] And our first question line comes from Frederic Blondeau from Laurentian.
Maybe a quick question for Gary. I was wondering if you could give us a bit more color on the integration of Blue Water so far. And maybe, I guess, as a second question, what should we be expecting in terms of financial contribution of Blue Water in Q4 and Q1 in the context of this market?
Fred, I mean, I'm happy to answer that, but I'm going to try Jim one more time and see if this connection is good. And if not, then I'll take over. Jim, are you hearing us okay? I guess not. So I'll take over. So obviously, Blue Water is an extremely important acquisition that we did. It not only brings technology, is not only EBITDA positive and cash flow positive but most importantly, it also allows us to bring in a lot of the due diligence opportunities in our other service offerings, whether it's in tax, title or valuation. With respect to the PTR, obviously, Blue Water is cash flow positive and EBITDA positive December is never really in November for that. They are never really great months because almost lose a whole week because of Thanksgiving, and we almost lose 1.5 weeks in Christmas in December.
So fourth quarter is never usually a robust month only because there's lots of holidays and reduced. But having said that, we're very optimistic with respect to what Al Qureshi and his team are doing. Extremely talented. They created the marketplace for MSRs HELOC, non-QM. It's amazing platforms they've done. They offer all of these solutions, and again, we'll continue to grow. Hesitant right now, Fred, to say what that's going to be because obviously, we have high expectations, but we also like to moderate. But let's just know that the acquisition that we have is not only synergistic, it's accretive and it's technology-driven, and it will have a significant impact to our bottom line as we go forward.
o just in your -- I guess, you took your overall revenue for 2023 -- sorry, 2022 from $140 million to $150 million, if I understood well, how much contribution from Blue Water do you have in there?
Gary, I can take that... This is... Just to be clear, so when we set our guidance for this year, it was prior to the Blue Water acquisition being even considered quite frankly. So just to be transparent, the updated guidance includes only the original revenue streams. We do anticipate, obviously, some additional revenues for Blue Water. There's not much in Q3 because the acquisition closed on September 20, but it will have a meaningful contribution to Q4. We are in the process of finalizing our 2023 budget, and we look forward to providing some additional guidance as we go into 2023 that will include complete integration of Blue Water.
So in your expectation -- I guess, revenue expectations for 2022, you don't have anything from Blue Water... Is that..
In resi -- our original guidance was $170 million to $190 million. So we wanted to be consistent with those revenue streams and resetting the lower guidance. But yes, we do expect it to be a little bit higher as a result of the Blue Water acquisition in Q4.
And Fred, it's Gary. Just to be clear I heard you say 115 instead of 150, but Angela has amended the guidance not including Blue Water from 170 to 190 down to between 140 and 150 without the other contribution. And that's 150, not 115. We have the next question moderator.
Our next question comes from Christian.
I want to start with the mechanical question. The financial tenements made reference to the notice about potential claim. I mean just light on detail. So I was wondering what you might be able to share around that as you had to keep here.
Christian, this is Angela. The company received a letter that could constitute a potential claim from the former employee. The letter was vague. However, the company is reviewing the claims as well as the letter. Just given the timing of receipt of the claims in the U.S. holidays, the auditors were unable to complete all of their procedures. Again, it's agreement from the former employee, it's vague in its claims. And based on the investigation and the review to date, we believe the ultimate resolution will not have any material adverse effect on the financial condition, results of operations, or cash flows of the company.
Okay. That's all helpful color and context there. The next question I want to ask and Fred already spoke on this, but the Blue Water business and the secondary mortgage market business there is new to us. A lot of the current business is exposed to the primary market. So just in your view, Gary, what drives growth in the secondary mortgage market? Is it toward to interest rates or other capital markets activity? Like what will make Blue Water perform best in an environment?
Hello, can you now, Gary.
It's really cracking, Jim. I think it's probably just won't work, unfortunately, sorry. I apologize to everyone that it's -- unfortunately, technology, you have to be adaptable. So Christian, Blue Waters business is healthy, whether it's a frothy business on the origination side or in times like this way. It just rise it's even more frothy in the -- to the extent that banks need to quit it. And so there's tons of product that's coming on stream in the mortgage market. There's a little bit of hesitation with respect to people acquiring these servicing rights in as Angela indicated earlier, the more interest rates keep rising, rising, rising, and people are waiting for a pause to say, well, at what point -- how do I price this, but more importantly, how do I get the returns that I'm expecting going forward?
And what impacted these continuing interest rates rise. So what we're seeing right now is lots of product coming on the market, and we're also seeing that the business has started as frothy as it was, but certainly, there's lots of products and lots of opportunity. Al Qureshi is working on lots of deals right now. So we're really optimistic this is going to be very healthy for us. So what's really, really important, Christian is that another reason aside from, I told everyone that when we look at acquisitions, we have to have 4 main tenants. Have to be real estate, it have to have technology. It has to be accretive and it has to be synergistic. All of those tenants have been answered with the Blue Water deal. And so we have that opportunity to be able to bring all of the service offerings because we digitized value was impact and type. And you can imagine, every time you're selling servicing rights, people have to review it. They have to say, okay, what is about valuation compared to the mortgage? So we have digitized the property patch, it needs to be reviewed. If the tax is paid in full. Same with flood. Flood reviews take place and very, very important in the U.S. And so -- and then from a title perspective, they need to know that they got clear title.
So all of those things is that Voxtur has been digitized. And so it's a really, really nice synergistic opportunity to augment our existing revenue services. And most importantly, Christian, it acts as an anticyclical cyclicality in our business where you've seen some of our competitors were the revenues and drop by anywhere from 50% to 85% between valuation and titles, we've shown that our valuation has come out strong, and overall, our business has held up very strong. And the reason is that we've now integrated against combating cyclicality by moving very definitely from the primary market or the secondary market.
Our next question in line comes from Mariusz Skonieczny.
I have a couple of questions. So maybe the first one, probably Angela would be best to answer. So I looked at your balance sheet for all the quarters. And in the current liabilities, you have unearned revenue. And for all the quarters since December 2021, that amount is about $4.5 million. And this quarter, it jumped to $8.5 million. And if you take the difference between that, it's about $4 million. So the question is, did you have a revenue during the quarter of about $4 million that wasn't recognized during the quarter, and that's why it showed up as an increase of unearned revenue on the balance sheet?
So a twofold answer. There was some additional revenue increases in our taxation division that is project driven and does sometimes result in deferred revenue that's recognized later. That's a small portion of it. A larger portion probably around $3 million of it is part of our strategy to resolve the related party AR by the end of the year. As a result of this strategy, we opted to defer the Q3 revenue. We expect to have a resolution by 12/31 and have that cleaned up. So just to be conservative, we deferred the Q3 revenue.
So if that revenue was recognized, it looks to me like your -- you would have probably shown a slight increase in revenue from quarter-to-quarter and probably you would have been EBITDA positive. Am I right?
That is correct. Yes. If we had not deferred that revenue, we would have been slightly EBITDA positive and quarter-over-quarter revenue would have increased 3%.
Okay. The second question that I have is also on the balance sheet your current portion of long-term debt showed up at $61 million. And I was wondering why is that. Is it because of the covenants? Is this going to move back to long-term liabilities?
Sure. Yes, we -- so because we were not in compliance with certain loan covenants, we are required under IFRS, even be provided as a waiver of those covenants, we're still required to accelerate all of the debt to current. As I mentioned earlier, we just completed a renegotiation with BMO of new covenants, and we do anticipate we will be in compliance. So when you look at Q4 for the audit, that long-term portion will be reclassed out of current. I'm sure you've known higher in Q3 because of the expanded credit facility put in place for the Blue Water acquisition, was USD 30 million.
Yes. Okay. So I find it very interesting that going back to my first question, that if it wasn't for that, lack of recognition of the revenue, extra revenue of $3 million, you guys would have shown a positive revenue growth from quarter-to-quarter and EBITDA positive. That is pretty incredible considering how awful the real estate market is right now.
Absolutely. Yes. And I think it just speaks to what I kind of mentioned earlier that, yes, volumes are reducing, but we have been picking up market share. We are doing cost reductions where we can. We are continuing to be strategic in that in certain areas where the volumes are continuing to be impacted. But yes, you're absolutely right.
Our next session on line comes from Colin Fisher from [ Toronto ].
So I have a couple of questions that are, I think are on the earning edge of a lot of people's minds. The related party receivables, obviously, it has remained high. I know that the goal was originally to have it be current -- fully current by the end of September as per the last call. Can you give me some clarity as to what's going on there? And I noticed also that you post the quarter, there has been some additional collection of around 1.1 million based on the 9% additional collected. Can you give some clarity as to where that is? And maybe that also goes back to Mariusz' question vis-a-vis the deferred revenue.
Angela?
Yes, sure. Yes. I mean obviously, the related party issue is top of mind for everyone. It's always a sensitive issue. We want to be completely transparent as possible. We have made some good collections, as you noted this quarter. We collected more than -- we invoiced, and we are working on a more wholesale plan for the end of the year to have that... to have that AR cleaned up. We're not really ready at this time to go into the details, but know that when we issue our audit, you're not going to see a related party balance quite that high.
Okay. Regarding the acquisitions that you do, do you capitalize all of the costs at the time of closing of acquisitions? Or do you expense any of those -- or sorry, capitalize any of those and then lead them into income costs later.
We cap... Under IFRS, we capitalized the majority of the acquisition costs as appropriate. Some items are obviously expense. But again, we just defer to the IFRS guidance on that. Generally, with the acquisitions, we record everything on a provisional basis and then do a full purchase price analysis. Some of the more complex acquisitions we use outside consultants like the Kroll to help make sure that we're valuing the intangibles and the goodwill appropriately. But yes, we generally follow IFRS guidance and anything that would be expensed would be backed out back for adjusted EBITDA calculations.
Right. And can you give some color -- in the last call, you guys have referred to some of the cost controls that you guys were implementing for Q -- I think it was starting in September. I'm wondering if you could give some color on that and how that's looking on a go-forward basis.
Sure. So kind of going back, we did a pretty significant reduction in force in May. We did another pretty significant reduction in force in August. Since that time, we have done what I would call more sort of strategic reductions targeting specific businesses that have been more impacted than others. We continue to do that as we're obviously looking at our forecast it's not just monthly now, it's almost daily. And so we continue to make adjustments where needed.
But we're also doing other things. I mean continuing to try to integrate and consolidate the acquisitions to get efficiencies, particularly in the kind of administrative areas where you can centralize task. We've looked at all of our projects and product development, prioritize what we think in this environment makes the most sense to continue doing and have kind of put on hold some of the other things that we'd like to do, but probably aren't in the best interest right now in this market. And we're just going to continue to do that. I think we've made some really good strides in the cost cuts that we've done. And hopefully, between some of the synergies and process improvements, I think we're really bridging the gap.
Can you guys give some color as to where you're at vis-a-vis breakeven or becoming profitable for Q4? Or is that going plexin Q1?
Well, go ahead, Go ahead, Angie.
I was just going to say, yes, we are -- because we -- the conditions obviously have been evolving so quickly. We have internally updated our forecast for Q4 to reset BMO covenant. I think we are finalizing our 2023 budget. It's pretty close to being done. And then I think we'll be comfortable giving out guidance for 2023, hopefully in the near term.
And is that -- because the guidance you've given has dropped Q4 revenues based on previous business line significantly. Is that primarily some covenant reasons?
Well, I think it's based on the market conditions, the volumes, particularly in some of the business units like in our title area that's been more impacted from the refinance and some of the purchase origination volumes going down. Some of it's been timing of rolling out some of our new products. So I think it's just indicative of just the overall market conditions.
Yes, Colin, I think that the big impact for us is that as Stacy and Jim have done a hell of a job as far as bringing AOL online and we have an abundance of clients that we're working through. But as you know, when you're dealing with major financial institutions, the integration and the testing and all that is moving at the pace of a slot so it doesn't really indicate how vibrant and robust this business is going to be. And quite frankly, if we've made an overzealous position, it was in our AOL that we felt that it was going to move a lot quicker than what it was. It has moved a lot quicker in the way that we've been able to board new clients.
But everything that we go through testing and piloting and all the other things just take some time. I mean, one of the reasons that we, for example, bought [ Gyropay ] years ago because we inherited 150 master service agreements. And so as most people know, logging a major bank could take up to 1.5 years to get approved from a legal standpoint, a financial standpoint, the whole, the veracity of reviews that have to be done in order for you to receive the authorization with the Masters agreement is extremely robust. Bringing AOL on is much in the same way. And so it's just taking a little bit longer. Otherwise, I think we went at a knockout quarter and year-end.
Regarding the financial reporting, is there going to be any movement towards breaking out the different business units to give some clarity as to what's moving what?
Angela?
Yes, so.. Yes, that is segment reporting is something that we have been discussing all year. Now that I think that we've kind of gotten through the -- all of the acquisitions, we are analyzing what's the best way to move forward with that. And we will definitely be in the future, providing a lot more data on specific lines of business.
Will you also be putting some sort of road map as to what you expect for future amortization and depreciation metric so that we can give some more forward-looking guidance on that as well?
Sure. Yes. I mean that's obviously something that we have. And we're happy to provide that as well. I know it's a significant number because of the value of the intangibles and the goodwill on the balance sheet. So yes, we will definitely be able to provide that.
One other question vis-a-vis the covenants. How material are the waivers now? How difficult or easy will it be for you guys to get back on side?
Well, BMO has obviously been an outstanding partner for Voxtur for a very long time. They have worked with us through all of the acquisitions and just sort of the evolution of the company. So it kind of gets about saying we can't thank them enough. And I think they recognize the long-term value of the company, and they recognize the kind of unprecedented market conditions that are taking place right now. I think we have reset covenants recently in a very kind of reasonable and conservative manner that should get us through the next couple of years as these conditions probably continue to be challenging at least through 2023 and then hopefully start to rebound a bit in 2024.
Excuse me, Colin. Having said that, we have utmost confidence that our repayment of interest and principal as we will engage in that over the course of the next 14 months is very attainable for us, and we do believe that we'll have free cash flow after that. So we're very confident as the bank is and for us being able to meet our thresholds.
Okay. I'd like to move maybe to a little softer items vis-a-vis the TSX uplifting, is that still on the table? Or has that been deferred? Or what's the plan on that?
Yes. We're moving forward with that, Colin. We've got a few administrative details to deal with, but the intention is that as soon as possible, and we will move towards the...
And then in terms of communication, I know that you -- there are certain criteria and limitations that you have. Will there be any sort of -- I mean, I think there's a big fear out in the marketplace that the next major update is going to be so after Q4 or the annual, which is June or whatever May, June. Is there going to be a bit more of an updating of the marketplace and what's actually happening with AOL for closure, the tax, the AOL box directing the Voxtur is it going to be a bit more of a communication from the firm on that type of information?
Well, Colin, I think that the biggest criticism that you have had, and I think the aspiration of everyone is that we need to have more press releases or at least updates with respect to how we are progressing. And so it's certainly top of mind. And as we log on with new clients when permitted and as we reach certain milestones, it's our intention to try and keep all of our shareholders up to date as humanly possible without breaching any requirements that they have with respect to the Securities Commission. So we know that providing our shareholders dated information as soon as possible, given the challenges of these economic times right now is -- we will do our best to keep everyone updated as we are progressing.
[Operator Instructions] And I'm showing we have no further questions in queue. I'll now turn it over to Gary for closing comments.
Okay. Thank you very much, everyone, for calling in today. This concludes our conference. Thank you for participating. You may now disconnect.