AITX Analysis – Thoughts for FY 2023

As Aaron Lewis once said, “it’s been a while” since I’ve made an AITX article. As I sit here waiting for the Bengals-Rams game to start, I figured I’d start to finally get this one down on figurative paper.

Today’s article will be a bit more of a subjective piece versus my typical articles. So keep that in mind. But as we round out FY 2022 at the end of this month, I’m going to go through some of my key thoughts and predictions for AITX’s FY 2023.

Remember, AITX has the funny fiscal year from back in the “On The Move” days. So I’m talking about the fiscal year that will end on February 28, 2023.

Let’s get into it!

Revenue / Sales Trajectory

Forecasting Revenue

To set the stage, as of the nine months ended November 30, 2021, AITX has hit about 1.1m in sales over the nine-month period. My prediction is that we land somewhere around 500k in revenue for Q4, so about 1.6m in revenue for FY 2022. That’s about a 4.5x increase from the prior fiscal year.

Now, as we move into FY 2023, we’ve heard the CEO already say that he has the same revenue growth goals that were from the year before, i.e. 5-15x revenue for the fiscal year. AITX hit the low end of that guidance, which was obviously not what he had in mind. However, we have to remember that 4.5x revenue growth is nothing to scoff at.

Let’s break this down for FY 2023 then…

Let’s say that AITX once again hits about the same revenue growth levels we saw in FY 2022. That 1.6m for FY 2022 becomes 7.2m for FY 2023. That seems like a lot, doesn’t it? That is the power of compounding for you 😊.

So what do I think will happen? If I knew that for sure, I wouldn’t be telling you guys! But here are some considerations…

If we think about the place where AITX was as a company as they moved into FY 2022, it is totally different to the company today. Remember, they hadn’t even moved into the REX yet, headcount was substantially lower, and several products hadn’t been launched yet (ROMAEO, ROSA 3.0, etc.).

So while the company didn’t hit some astronomical growth that the OTC priced in back in February/March 2021, they did grow quite a bit and achieve a lot as a business. Because of that and how far the company has come operationally since then, I still expect we’ll see some level of compound growth again this year.

Whether that’s 4.5x, 2x, or 100x, I don’t know. But my money is on at least more than 2x growth for the fiscal year.

Deployments Snowball

I wrote about this in a prior article here, so I will just paraphrase. I truly think that AITX’s biggest hurdle to more sales is ensuring that all new deployments are completed and working for a minimum of 3-6 months. This is especially important for ROAMEO which is brand new, as well as an deployments in high traffic areas: Six Flags, Dallas Love, etc.

I think a key reason why the sales pipeline seems slow for AITX is because the track record isn’t quite there yet. I’m not saying the products don’t work, I’m just saying customers don’t have ten years of performance to compare to. For example, when you buy a car like a Corolla, this car has been around for decades, and you can even see last year’s model’s performance.

With RAD products, the proven track record isn’t quite there yet, or maybe not at the level where customers would like it to be first.

This is something I think will begin to change dramatically in FY 2023. We’re seeing some very key deployments going out which will not only showcase what these products can do, but it will also provide some sense of comfort to customers.

For example, after six months of ROAMEO patrolling a parking lot at Six Flags, AITX will have plenty of data on performance. So a customer who may not have wanted to buy before would now see that a ROAMEO didn’t in fact (I don’t know random example) ram into people’s cars or clobber an old lady.

Once that happens and big customers realize the value of the products, I believe other customers will start ordering at an exponential rate.

Cash and Dilution

I’ve said this probably a billion times, but I’ll just say it again. AITX is going to need a cash injection from outside investors at some point this year. Based on the latest 10Q and the CEO himself, we’re looking at sometime around Q2 FY 2023 to be the first time more cash could be needed.

As of November 2021, AITX was sitting at about 4m in cash, which also didn’t include any outside investment since then. So say we land around 4-5m in cash at the end of February 2022. That’s likely enough to get them through Q1 and into Q2 before needing outside cash (barring any massive sales).

So, again, expect some dilution around the middle of the year. Like a parrot, I’ll say it again, if you trust management to reinvest capital correctly, don’t be alarmed.

All of that being said – Steve said there is something in the works about raising capital without having to raise the outstanding share count. Whether that comes to fruition or not, I don’t know. For now, I’m expecting some level of dilution and maybe an increase to the authorized shares.

Profitability

There is very near to zero percent chance that AITX is profitable for FY 2023. However, there is a higher, albeit slim, chance that you see a profitable quarter (at the operating profit level) by Q4. But again, very unlikely.

Is this a cause for concern? Also no. This was never the plan. They are aggressively investing in their products and sales force, so it’s a long game here. Focus more on deployments and sales from above, not necessarily profitability (yet).

New Offerings

These are quicker hitters, but some cool stuff look out for this year are:

• ROAMEO deployments – technically several of these have already been sold, but I’m excited to see how these deployments pan out. I think we’re going to get some really cool videos from our investigator investors 😊.
• ROSA 3.0 – ROSA has been consistently RAD’s top performer, so the next generation of ROSA should keep the momentum going.
• RAD Light My Way – I won’t re-hash it, but I love RAD Light My Way. See my article on that here.
• RAD Dog – name TBD, but the Ghost Robotics dog is still in the works and will be one of the more unique offerings. That one will be a huge attention grabber once its rolled out to customers, that’s for sure!

Wrap Up

If I could sum my thoughts on FY 2023, they’d be: I expect the business to keep chugging along with sales growth, more deployments, etc., but don’t expect profitability and no dilution. Seems pretty straightforward enough, right?

No matter how it turns out, I’m very excited for the prospects of AITX and I’ll of course be following along closely!

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DISCLAIMER – I CURRENTLY HOLD A LONG POSITION IN $AITX. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. AT THE TIME OF WRITING THIS ARTICLE, PERSONS AFFILIATED WITH THE COMPANY ANALYZED ABOVE MAY BE PROVIDING MONETARY COMPENSATION AS MONTHLY PATRONS THROUGH MY PATREON. THIS COMPENSATION IS NOT PROVIDED IN RETURN FOR ANY SERVICE, WRITING ABOUT A PARTICULAR TOPIC, AND/OR FAVORABLE OR UNFAVORABLE OPINIONS. MY PATREON SUPPORTERS HAVE NO INFLUENCE ON THE CONTENT OF MY ARTICLES.