Pinned straw:
I've accepted a few things about Tony.
Firstly, socials is part of his modus operandi ... I look at it as good insight into his mindset/thinking and entertainment and think nothing more of it. It takes him more time to breathe/fart than to reply to a socials post, so I don't see this as a distraction - it just makes him more colourful and keeps him and AIM in the news. And that for me, is actually a good thing!
Secondly, AIM = Tony = AIM and it is his life long passion and probably his very being ... it has probably come to a point where money in absolute terms means nothing to him. So I can't see him selling AIM out for the money at all. I suspect the lofty ambitions, the challenge to meet those ambitions is what makes Tony tick as a human ...
I hope I am right as it would be a huge tragedy if AIM was sold ...!
Discl: Held IRL and in SM
Thanks for flagging this @mikebrisy !
Just had a listen - every conversation with Tony is both boring (because he stays completely on message and finds ways to insert the same key messages/soundbites into the conversation) but also insightful (always new nuggets to pick up). This was no different.
Tony’s view on share liquidity was interesting. It is public news that there were 3 substantial shareholders selling out/down, and between them, would have accounted for and supplied the ~20m shares trade in the last 2 weeks, so no surprises there - perhaps he was alluding this when he said “kind of waiting for a liquidity event”. This huge “liquidity event” was certainly well absorbed by the market - chart-wise, there now seems to be much clearer airspace ahead for the price to nudge north.
Picked up various bits and pieces which is not entirely new, but reinforces for me, just how good a place I think AIM is in now.
How The Market Might Be Viewing AIM Now
- Date of shutting off of services business end-Dec has resulted in AIM being seen as a “de-risked” company vs one who is embarking on the transformation journey
- Coming out of the roadshows, people are getting it, people are understanding
- Liquidity is key metric - trading ~200k shares a day before the result, in the 2 weeks since the result 20m shares - cycled out a lot of people who had invested in that Services business
- Have been an illiquid stock - had this overhang of stock that was kind of waiting for a liquidity event
- Just getting started in telling the story better for retail as want to be at 1m shares per day liquidity going forward - getting the liquidity up much more than the share price is what I really care about now
- The mindset of the people who have come in, in that 2 weeks - so everyone’s bought in on the news story
- Feedback from some funds that exited when we announced the transition in 2021 was that they didn’t need to hold the stock on the way down. So a few of them have got back in again. And the got in at a lower price than when they got out
- The tools that your team has in their toolbox now is so broad that it really de-risks those aspects - all those risks that you have to deliver on, you’ve proved that you can already do them
The Transition from Services To Tech
- Top line revenue has been stagnant for the last 4 years - but have lost services revenue and gaining tech revenue and so the 2 of them have literally been cancelling each other out - now have a strong AI-powered technology business, adding annual recurring revenue to the mix for the first time this FY results
- AIM headcount - 900 with re-speakers, now down to 200
Competition
- Competition - the hyperscalers have the same translation capability
- Microsoft - Teams & Copilot account now have access to 8 different languages through Microsoft Interpreter, Amazon, Google, Meta - each have exactly the same captioning/Translating product offering within their walled gardens
- Microsoft cannot solve the voice translation problem if they are in a baseball stadium - that is what AIM does
- Microsoft is both a supplier of AI, but also a AIM customer - do not use AIM to get the translating capability into Teams, but MSFT uses AIM for live events - MSFT does API’s, not conference and events
- AIM provides captioning and translations in environments OUTSIDE of the Teams, Zoom, environments, in the same controlled way that MSFT can do within a Teams environment
AIM Culture
- Every internal KPI is “speed to resolution”
Moat
- “We have not lost a single logo!”
- “Once the encoders are plugged in, “No one unplugs the box”
- “General approach is “ Yes, and ..., can we do them both”, can we plant a lot of seeds now - once the product is setup, it doesn't matter whether its LEXI Text, its LEXI Voice, its LEXI AI, it all just works once its configured. Same encoder, same infrastructure, same live video output. And what we can do for live, we can also obviously do for recorded. And we are only just getting started because most of the revenue that we’ve actually printed is all still just text-based and we thank that Voice is going to be 30x that in terms of market opportunity
Technology
- AIM has LLM’s peer reviewing other LLM’s to reduce “hallunications” and errors from an over-confident LLM - “garbage-in, garbage out and the garbage multiplies” - getting it right at source is key
Revenue Drivers
- “And the fact that we got this one shot in the locker when the European Broadcast Act came in, which was 28 June this year, that was the first time when the European broadcasters had to do captioning, so it was a greenfield opportunity, and we’ve captured that market. So we’ve effectively become the default standard now for live captioning globally, because we’ve captured Europe.And it was open to be captured in the last 12 months and that was growing from 55 encoders last year in the region to 315 this year and adding an extra 23 countries”
- The future model for countries is to have local partners with a 30-70 revenue split model, where they can put AIM software on their hardware or they can sell our entire solution in territory - 1st territory deal done in Switzerland
Discl: Held IRL and in SM
Thanks for the summary @jcmleng
I wish Tony wasn’t so focused on improving stock liquidity. Not only is it a distraction, but it’s also misguided.
In the paper “Liquidity as an Investment Style” (Ibbotson, Chen, Kim, Hu; Yale ICF working paper, 2012), looking at stock performance over a four decade period - the best performing were mid-low liquidity microcaps. Somewhat surprisingly, the worst performing were high liquidity microcaps.
@mushroompanda , thanks for the table! Agree with @mikebrisy that you should send that to Tony .. I was also surprised at the focus on liquidity and did not quite understand that.
My simplistic view is that there is a finite number of shares on issue, and there is a finite number of free float outside of the substantial shareholders. And the volume traded per day is what it is. A liqudity event is created if a large block is sold on-market (vs insto to insto) or if new shares are issued - there is more food in the pond to feed the small fishes, so to speak ...
So unless Tony is thinking of (1) flogging shares he owns or (2) issuing more shares, heaven forbid, I could not quite see what levers he, as CEO and major owner, could pull to "improve liquidity" and why would that concern him. The comment on being "able to get in and out more easily" also did not make sense to me. If the AIM story is good, and you have onboarded new believers, I would expect them to hang on, thus reducing liquidity, pushing up the price.
I thus read that as him trying to put a positive spin on the recent large volume of on-market sales from the 3 substantial holders that we know are selling/have sold large blocks on market - Deanne, TIGA, Salter Brothers. To signal to the market, "Its all good folks, no stresses with these 3 folk selling, more liquidity is really good ..."
I suspect that the intense market roadshow is driven by Tony wanting to ensure that market does not misunderstand, again, what is happening to AIM and unnecessarily smack the share price, again. I see this as positive, necessary and short term effort to ensure the share price did not tank. The effort to fix an already tanked share price when the news is actually good would be a far greater and ongoing distraction for Tony, given the hurt on his ego and hip pocket, probably in that order.
Putting the 2 together, this full-on engagement blitz probably took on heightened importance when ~10% of the AIM register was known to be offloading to the market post results.
If these were indeed Tony's motivations, then he has done a great job as the market now seems to have understood the story, has more than absorbed the offloaded volumes, cleaned up the register and brought on more believers of the Tech growth story. The price action in the past week would certainly point to that. The price is now poised nicely to have a crack at breaking past 68c which is currently constrained by the 200SMA and the intermediate upward trendline. Would not hurt for it to bounce around these levels a bit more to absorb any further selling before decisively moving past 68c.
Can't quite see 49c now ... reconciled to consider adding at these levels to increase my allocation.
Discl: Held IRL and in SM
