Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 9 Dec, 24 | AISP | Speculative Buy | USD 3.41 | USD 3.72 | USD 3.99 | 9 days | 17.0% |
Data Powered by EOD Historical Data (“EODHD”).
Airship AI Holdings, Inc. provides artificial intelligence (AI)-driven video, sensor, and data management surveillance platform in the United States. The company offers Outpost AI, an edge-based device for video and metadata recording; Airship Command, a suite of visualization tools that allows customers to interact with their data and devices; and Acropolis, an enterprise management software. It serves government, public sector, law enforcement, military, and commercial enterprise organizations. The company is headquartered in Redmond, Washington.
Strong Revenue Growth: Airship AI achieved an 18% year-over-year growth in net revenue for Q3 2024, with total revenues reaching $2.9 million. Additionally, the company experienced a 61% increase in net revenue compared to its full-year 2023 revenue of $12.3 million. This demonstrates robust sales expansion.
High Gross Margin: The company reported a gross margin of 75% for Q3 2024, driven by a favorable product mix and increased sales of its Outpost AI product. This indicates the company’s ability to generate profits with higher efficiency and scalability.
Cash Flow Challenges: Although the company raised $7.3 million in net proceeds from its public offering, it still reported a net cash outflow of $0.4 million from operating activities in Q3 2024. This suggests ongoing challenges in managing cash flow and balancing operational expenses.
Operating Loss: Airship AI recorded an operating loss of $1.6 million for Q3 2024, reflecting increased stock-based compensation and the overall sales level. This indicates the company is still struggling with operational profitability despite revenue growth.
Key investment risks for Airship AI include its ongoing operating losses, cash flow challenges, reliance on government contracts with potential budget constraints, and the uncertainty of executing large, complex defense-related deals in a highly competitive and regulated market.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 3.41 | 2.97 | 3.72 | 3.99 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Q3 2024 Financial Performance
For the quarter ending September 30, 2024, Airship AI reported net revenues of $2.9 million. The company achieved gross profits of $2.2 million, resulting in a gross margin percentage of 75%. This increase in margin was partly due to a favorable product mix, with a reduction in equipment purchases and an increase in sales of Outpost AI, the company's edge IoT appliance.
Operating Loss and Noncash Gains
Airship AI reported an operating loss of $1.6 million for the quarter, which was primarily attributable to increased stock-based compensation and overall sales levels. However, the company generated other income totaling $7.8 million, which included gains from changes in the fair value of earnout liability ($5.5 million), warrant liability ($1.5 million), and convertible debt ($0.4 million). These gains contributed to a net income of $6.2 million, or $0.25 per basic share, for the quarter.
Cash Flow and Liquidity
Net cash used in operating activities for the third quarter of 2024 amounted to $0.4 million. As of September 30, 2024, Airship AI had cash and cash equivalents totaling $6.5 million. The company also closed an $8 million public offering during the quarter, which resulted in net proceeds of approximately $7.3 million after deducting offering expenses.
Backlog and Pipeline Overview
At the end of Q3 2024, Airship AI’s backlog stood at $6.6 million, representing firm fixed-price contracts expected to be shipped and invoiced in Q4 2024 or Q1 2025. The company’s validated pipeline was valued at approximately $130 million, consisting of a mix of single and multi-year opportunities across its customer verticals. These opportunities are expected to progress over the next 18 to 24 months.
Significant Contract Wins and Pilot Projects
Airship AI secured several notable contracts during the third quarter. These included a $4.0 million firm-fixed price contract with a U.S. Department of Homeland Security agency for advanced integrated solutions supporting real-time intelligence operations along the U.S. borders, leveraging Outpost AI. Additionally, the company was awarded a $1.2 million firm-fixed price support and maintenance contract for Acropolis Enterprise Video and Data Management Platform for a Fortune 100 company’s global operations.
Pilot Success and Future Large Opportunities
Airship AI successfully completed a pilot project to replace failing capabilities within critical infrastructure on the U.S. southern border. This project led to an Airship AI brand-name only award, which is expected to be shipped and installed in Q4 2024. This initial award is part of a broader, more substantial opportunity valued at over $50 million over the next four years, based on market research and approved pricing from awarded procurement efforts.
Industry Participation and Events
Throughout Q3 2024, Airship AI participated in several prestigious industry events. These included JIFX (Joint Interagency Field Exercise), a collaborative event led by the Naval Post-Graduate School, and TIDE (Technology Innovation Discovery Event), a Department of Defense-sponsored initiative. Additionally, the company sponsored and participated in UTAC, a premier unmanned aerial and robotic systems tactical event aimed at public safety, government, and defense agencies.
Capital Markets and Strategic Updates
Airship AI made significant strides in its capital markets activities, including the completion of an $8 million at-market public offering, which provided the company with additional funds to support large transactions. The company also expanded its sales, business development, and partner marketing capabilities by bringing in specialized industry talent. The company plans to hold regular quarterly conference calls in Fiscal 2025 to update stakeholders on its progress.
Outlook for 2024 and Beyond
Looking ahead, Airship AI is poised for triple-digit revenue growth in 2024, supported by a validated pipeline of approximately $130 million and an improving gross profit margin. The company plans to focus on strategic investments in sales, business development, and product innovation, including the release of new Outpost AI product offerings and expanding custom-trained AI models. Airship AI also aims to enhance its presence in the commercial and retail sectors, particularly in combating organized retail crime (ORC).
Management’s Perspective on Future Growth
Paul Allen, President of Airship AI, highlighted the company’s continued momentum in the third quarter, despite challenges such as the U.S. Government's fiscal year-end and budget constraints. He emphasized the strong growth in net revenue and the company's improved gross margin performance. Allen also noted that recent capital raises and market dynamics, including a potential shift in federal spending under the upcoming presidential administration, position Airship AI to capitalize on increased investments in border security technologies, which align with its core expertise in AI-driven edge solutions.
Technical Commentary
On the daily chart, AISP shows strong bullish momentum, trading above both an upward-sloping trendline and a horizontal support level. The RSI, currently at 61.20, indicates positive momentum, suggesting that the stock has room for further gains. Increased trading volumes further support this upward trend. The current market price (CMP) is above the 21-period Simple Moving Average (SMA), which may act as a minor support level. Key support levels are at USD 0.01 and USD 0.02, while resistance levels are at USD 0.03 and USD 0.04, indicating potential price targets for the stock.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Software - Infrastructure
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| AISP Airship AI Holdings Inc |
0.62 17.22% | 4.23 | 5.79 | 113.64 | 3.89 | - | 3.71 | 5.35 |
| MSFT Microsoft Corporation |
2.46 0.56% | 439.85 | 37.32 | 29.94 | 13.03 | 12.45 | 13.06 | 24.59 |
| ORCL Oracle Corporation |
4.83 2.92% | 170.24 | 29.34 | 18.66 | 5.55 | 74.06 | 7.10 | 18.13 |
| ADBE Adobe Systems Incorporated |
1.91 0.43% | 443.22 | 46.32 | 26.81 | 11.51 | 16.73 | 11.55 | 31.20 |
| PANW Palo Alto Networks Inc |
1.74 0.92% | 190.50 | 44.57 | 45.05 | 11.98 | 20.70 | 11.82 | 77.11 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are based on technical parameters, and the fundamental performance of the company in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is December 06, 2024. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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