Artificial Solutions: Customer acquisition acceleration in prospect

Hardman & Co

Artificial Solutions (NASDAQ:ASAI): The arrival of the new CEO, Per Ottosson, and the new CFO, Fredrik Törgren, was accompanied by a series of strategic decisions seeking to accelerate new customer acquisition and significantly reduce costs. The strategic shift away from professional services was fully executed as part of the restructuring. 1Q’21 results and management commentary confirm a positive market response to the new recurring revenue model, especially the significant signed contracts and further prospective wins. The company’s technology remains market-leading at a time when enterprises are emphatically seeking to automate business processes.

  • Our updated revenue forecasts post 1Q’21 results suggest strong growth ahead. The announcement of contract wins with a large US tech company and Telefónica Deutschland/O2 under the new model are highly positive indicators, especially given the scope for high transaction volumes from each.
  • The Cloud version of the core AI chatbot platform, Teneo, is built on Microsoft Azure and is designed to work seamlessly alongside the Microsoft suite of cognitive services tools. Adding a sophisticated chatbot platform to Microsoft LUIS and selling this in the Azure Marketplace should unlock customer wins.
  • The transition from upfront licences to recurring revenue would typically imply a period of flat revenue as revenue from new deals is deferred. However, a number of existing customers are busy expanding their deployments, in turn generating usage revenue growth; this momentum will support FY’21 revenue.
  • The path to breakeven for the business is now clearer, following a series of measures to remove unproductive operations and streamline headcount, which has been reduced from ca.113 at end-2019 to ca.70. We forecast EBITDA breakeven in FY’22 followed by strong EBITDA margin expansion in FY’23.
  • Investment summary: Artificial Solutions has demonstrated technology leadership by the major deployments achieved to date combined with a long list of tier systems integrators, which have tested and approved the Teneo platform. The company continues to trade at a significant discount to the value of its patent portfolio of ca.$140m. Our DCF model suggests a fair value market value of €160m (SEK1,620m) compared with the current market value of €48m (SEK490m).

DOWNLOAD THE FULL REPORT

Share on:
Find more news, interviews, share price & company profile here for:
    Analyst Mark Thomas of Hardman & Co breaks down how the Group is building long-term shareholder value by expanding specialist lending, attracting new banking clients, and scaling its wealth management business.
    Discover insights from analyst Mark Thomas on NB Private Equity Partners plc (LON:NBPE) as he discusses key trends, capital allocation, and market dynamics.
    Mark Thomas discusses the firm’s revised strategy, how it’s navigating interest rate expectations, and what a potential Trump 2.0 administration could mean for NBPE
    Discover the latest insights on H&T Group plc's strong 2024 performance, featuring impressive growth in profits, retail sales, and pawnbroking demand.
    Mark Thomas breaks down why the momentum in pawnbroking, value retail, forex, gold trading, and store expansion could make H&T a standout in a tight consumer environment
    The spotlight is on a trading update that surpassed expectations and a strategy that’s tightening focus on growth and guest experience

      Search

      Search