Loss-Making Ai-Media Roadshows for Australia IPO

AI Media on IPO Roadshow for Australia Listing in September 2020

Australia-based translation and captioning provider Ai-Media is on course to list on the ASX in mid-September 2020. The Sydney-headquartered company recently lodged its prospectus with the Australian Securities and Investments Commission (ASIC).

Founded in 2003, Ai-Media has around 160 staff across offices in Sydney, Melbourne, Singapore, and London, as well as in the US and Canada.

The company has its roots in access services, catering primarily to the Deaf and hard-of-hearing communities. It now offers live and recorded captioning, transcription, subtitling, and translation for live broadcast and recorded settings.

On the back of the filing, the company is now roadshowing with major investors in Australia. In a 200-page initial public offering (IPO) prospectus, dated August 10, 2020, Ai-Media invited investors to acquire “53.2 million Shares at the Offer Price of $1.23 per share.” The listing would see Ai-Media raise a total AUD 65.5m (USD 47.6m).

The company projects full-year 2020 revenues of AUD 37.9m in 2020 (pro-forma including the ACS acquisition) and AUD 43.8m in 2021F.

According to the financials in the prospectus (statutory), the company has incurred an EBITDA-level loss of AUD -2.9m in 2019. The loss is expected to significantly widen to AUD -10.3m in 2020 before narrowing slightly to a still-sizable AUD -8.4m. On a pro-forma basis, the numbers look slightly better.

Ai-Media said in the same prospectus that its customers include broadcasters, government, and academia, and that the majority of its revenue comes from enterprise customers. Geographically, Ai-Media generates about 47% of its revenues from clients based in Australia and New Zealand, while 44% comes from North America.

As previously reported by Slator, if Ai-Media achieves its target share price at IPO, the company will list with a market cap of around AUD 177m — or 4x forecast 2021 revenues. It is set to join rival Straker Translations as the second language service provider listed in Australia.

While the company has been on a consistent revenue growth trajectory for years, generating losses of over 20% of the top line does mean Ai-Media needs a compelling long-term story for investors to buy into.

The company said it has, so far, spent around USD 36m developing a proprietary, cloud-based platform. The pitch to investors centers around product and automation against a backdrop of a high-growth industry.

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Ai-Media also identified key industry growth drivers, including the rise of the online video and OTT market, an increase of content consumption on mobile devices, regulatory requirements for access services, and a growing hard-of-hearing population. They also cite growth in demand within the education and corporate events sectors.

The company said it expects growth to come from its existing geographical markets, facilitated by the automation and scalability of its platform. They also plan to grow organically and through further acquisitions, having acquired US-based ASL interpreting and captioning company Alternative Communications Services (ACS) in 2020.

The retail offer is open between August 17, 2020 and September 3, 2020. Shares will be issued on September 9, 2020 and are expected to begin trading on September 15, 2020.