Ai-Media Turns EBITDA-Profitable as Acquisitions Pay Off

AI Media Financial Results 2022 New

On August 30, 2022, Ai-Media (ASX: AIM) published (download) results for the 12 months to June 2022, representing its 2022 financial year. The news comes just 12 days after the Australia-based captioning, transcription, and translation provider announced a three-year contract with Google worth up to USD 3.5m.

The company grew its topline by 22% to AUD 60.1m (USD 41.2m) from AUD 49.2m (USD 33.8m) in FY21.

“FY22 was a record year for Ai-Media in terms of revenue, volume, and customers. We are particularly delighted with the successful first year of operations of our transformative EEG acquisition (Subscriber Content), which delivered breakout sales growth of over 40%,” said Tony Abrahams, Ai-Media co-founder and CEO. Ai-Media acquired EEG, a video and captioning technology firm based in North America, in April 2021 for USD 34m.

EBITDA turned positive, coming in at AUD 1.1m, which was characterized in the investor presentation as a “significant improvement” of AUD 9.8m (USD 6.7m) from an EBITDA loss of AUD –8.7m (USD –5.9) in FY21.

The company also changed its revenue mix; from 94% Services and the remainder SaaS & Support and Devices in FY 2021 to 70% Services, 18% SaaS & Support, and 12% Devices. Typically, companies generating all of or a significant portion of revenue via recurring SaaS (Software as a Service) tend to get valued at higher multiples than pure service providers.

The same results included a competitor analysis chart that mentioned one of Ai-Media’s flagship products, iCap Network (a connectivity bridge to captioning services), being used by a few close competitors.

According to the chart footnote, “Verbit, Red Bee, and 3Play Media are all using the iCap Network and infrastructure to deliver their captioning solutions, without paying significant fees to Ai Media.” Leveraging this infrastructure ownership seems like a low-hanging fruit for Ai-Media to compete more efficiently.

CEO Abrahams said, “We will continue with our strategy to grow our iCap network across the globe and accelerate our transition towards a higher portion of SaaS and devices revenue, leading to higher margins and greater recurring revenue.”

Shares in the company traded flat following the release of full-year figures as the company had already provided guidance on annual results in late July 2022 along with quarterly earnings. That said, since late July, shares in Ai-Media have rallied over 40% on hopes that the company might be turning the corner on profitability.

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