Interesting long format interview on Investorhub with Tony Abrahams.

Investor Hub CEO Discussion

While a lot of the content will already be familiar to investors, there were several new insights I found interesting, including Tony's articulation of the changing of the guard on the investor register, as well as aspects of how he has led the required transformation within the business, and also more examples of use cases for the tech.

On thing is clear to me, FY26 is going to be an important pivotal year as in 1H "old" services transition to zero, and in 2H we see the emergence of the tech business on its own.

Analogous to the "capital sales to SaaS revenue" transition that many of us have played to great benefit over the last 5 years in several businesses, will we see the same value creation from the Services-to-Tech transition here? Answer = yes, if the tech trajectory is as strong as Tony thinks it will be.

While I am still getting up the learning curve on this one, having held in RL for only 1 year and 8 days (!) - this is one of the small number of stocks in my portfolio for which I have real excitement. (... not necessarily a siccess indicator!)

I love a founder CEO with a bold vision.

Disc: Held in RL and SM

Creating this separate post to take it away from the FY25 results focus.

I listened to the Ausbiz interview which is on the AIM Linked-In page and picked up the following Tony comments that got lost in the FY25 results for me:

LEXI Latency Improvements

• LEXI Text LIVE - the improvement in the last 12 months has gone from "5 to 8 seconds response from a human captioner" to "3 secs minus the human"
• LEXI Voice - the improvement in the last 12M has gone from "30 seconds" to "8 seconds minus the human", Tony believes it can go down to 3 seconds in the next 12-18 months
• Takes speech in original language and translates into text in original language
• Translates original language text to new language text
• Renders new language text to speech in new language
• "This reflects the improvement in the underlying AI engines. AIM essentially plugs in and embeds the latest & greatest AI tools into the customers workflow"

While I seem to have heard these comments in the various preso's Tony has done, I did pause for a bit and went "Wow". That quantum of technology improvement is very impressive, particularly when you breakdown the actual steps as to how LEXI Voice actually works.

Which brings to the following points worth repeating that I think the market is not fully clear about, amidst anything and everything mumbled in the name of AI.

• AIM is not competing in the AI space at all.
• It is a "bring-it-on-gimme-more-AI" CUSTOMER and CONSUMER of AI technology.
• The faster and greater the technology advancements are in AI -> the faster AIM can bake these into the AIM tech stack -> the better the latency improvement -> the more efficient LEXI will be -> the more attractive the LEXI economics become
• I should cheer AI translation improvements, not fear them at all

Whatever your thoughts are on Tony, the one thing that impresses me is his ability to stay very consistently on message.

Where he needs to improve is when the story changes/transitions requiring better explanation - I use "explanation" deliberately vs a more negative connotating "transparency".

Where I myself need to improve is to listen more carefully to what he is saying, to catch and interpret that transition, rather than be caught up in the headlines - this is the only thing within my control ...

Discl: Held IRL and in SM

Some may wonder why $AIM SP opened up strongly after the release of the results this morning, but then has actually dropped significantly after the investor call.

Before explaining why I think this has happened, I want to say that, in my opinion, $AIM gave a reasonable update today. I haven't gone through it in detail yet, but I'll jot down some of the highlights at the end of this straw.

So What's the Big Deal?

I wonder if anyone else noticed the sleight of hand which - to me anyway - is a significant change in strategy? (I wrote this sentence when the SP was still up amost 10%, and I guess the answer is "yes" lot's have noticed!)

Spot the difference in the following 2 slides: the first is today's at FY25, and the second from 1H FY25.

From today at FY25

From 1H FY25 6-months ago

Put simply, the target for FY29 Tech revenue has come off from $150m to $120m in 6 months.

And so, a continuing Services revenue (being new professional services to help clients embed new products) has been created.

Magically, $30m revenue is targeted for this new Services product, so the $150m overall revenue target remains, but presumably the previous $60m EBITDA will be reduced. However, what the $60m has become was not communicated (but can easily be calculated).

I was a bit slow at picking up this difference (didn't realise until it came up on the Q&A), and so I consider that Tony and his CFO were less clear in explaining the change in thinking.

My Assessment

For those of us who have modelled what a $150m revenue tech business in FY29 looks like in terms of value, the SP today does not reflect this value. In fact, the margin of safety is so large, that there is ample room for several more "downgrades" like today.

If you want to have a quick look, consider @Travisty's recent valuation (noting the discount rate as well as margin of safety applied!)

Pending a deeper analysis of today's result, I think $AIM is making progress. But this material change in just 6 months is - to my way of thinking - a clear demonstration of why a high discount rate and/or factor of safety is warranted for this business.

My assessment of risk also means I will maintain my current position size of 5%.

Should, in future reports, $AIM demonstrate that it can scale towards its lofty ambition, there will be ample opportunity to add more.

Selected Other Highlights

Above, I have focused on the big shift of the day, there is also a lot to like in the FY delivery, including:

• Encoders growing by +39%
• Tech revenue up +19%, accelerating +$23.6m in H2 from +$17.5m from 1H
• Cash balance up by +$3.8m to $14,2m and no debt - aided by change to structure of contracts
• Investment in product fully expensed ($3.5m off EBITDA)
• Expanded from 11 to 25 countries, driven by EU
• LEXI Voice is now being implemented in initial customers, with revenue expected in H2 FY26
• LEXI AI is targeted for launch at the NAB show in April 2026

There are a few technical revenue issues that I need to work through, including it sounds like some restatement of last year. (Note to self to have a closer look.)

Tony peppered the presentation with progress at several high profile clients. A few examples:

AWS is switching off its human services and moving fully to Lexi, one of $AIMs largest enterprise customers, for the live events it hosts. (Breaking news today,....based on accuracy of the AI being better than humans.)

Wins in the US Government (US Congress and US Senate, leveraging a reference case from the US) and Canadian parliament - indicating progress on the Government row of the 9x9..

Conclusion

Long term aspirational targets are a double-edged sword, Initially last year we saw the $AIM SP benefit from them, and today we are seeing it suffer. However, overall, this business is executing its strategy, and is growing strongly, with the new products moving into commercialisation phase and potentially opening up the addressible market.

While the aspiration has been reset, from my perspective, the overall thesis is intact and the changes are relatively minor within the margin of safety.

Disc: Held in SM and RL

AI media reported a 2% decrease in revenue- the market doesnt like it- however as has been laid out here before this misses the fact that tech SaaS revenue is growing whilst the old revenue model is deliberately being phased lower.

tony reiterated his FY29 outlook which may be overly optomistic however there is a large margin of safety at todays current market cap!

encoder sales are increasing

tech sales are increasing

LEXI voice and LEXI AI are expected to contribute to revenue over the next 1-2 years.

i think the market is missing a trick here and i have topped up on todays weakenss making AIM my second largest holding in RL

keen to hear the brains trusts opinions on todays results

25th July 25

Tracking along nicly so far though looking forward to hearing everyone’s comments once figures are released. Im figuring, this climb as far as most are concerned here, would be in anticipation of better figures at this stage, right?

There's a lot about AI-Media that is easy to miss, so I wanted to try and elucidate the key aspects of the business, its offering and the competitive advantages it has -- as informed by today's conversation with co-founder and CEO Tony Abrahams.

But, to be honest, i'm not confident i've got things right so please correct me if you think I'm off base.

First, as @mushroompanda has already said, they aren't building AI models themselves. AI-Media’s technology relies on APIs (Application Programming Interfaces) to connect their software with these external AI engines.

AIM's products provide context to AI engines, such as metadata from broadcast streams (e.g., identifying speakers, locations, or specific program segments). This customization improves the accuracy of AI-generated captions by using additional data.

Their competitive edge comes from effectively embedding these AI models into a unique, customer-focused delivery system which integrates into existing workflows. It's more about ingesting audio/video feeds, extracting the relevant information, and sending it back in real-time so it cam be inserted/overlaid into the broadcast.

The acquisition of EEG (a provider of encoding hardware) was really a pivotal moment for AIM, giving it control over the critical hardware needed to feed audio data into AI models, allowing seamless integration with their cloud-based captioning services.

The total addressable market for AI language services is vast, estimated at around $70 billion annually. Tony pointed out that AI-Media’s current focus—live speech-to-text and live captioning—represents just a small fraction of this market, approximately 1%.

At the moment, around 90% of AI-Media’s operations are centered on live captioning and transcription, primarily driven by their LEXI solutions. However, Tony stressed that this is just the tip of the iceberg, indicating that the company is still in the early stages of tapping into the broader market potential.

A significant portion of the market opportunity lies in recorded media, which accounts for about 25% of the total market. This includes transcription and captioning for pre-recorded content like TV shows, movies, and online videos.

There are also considerable opportunities in broader AI language services such as voice dubbing, audio description for visually impaired audiences, and other multilingual services. This segment, which Tony identified as the larger $69 billion part of the market, involves using AI to handle voice processing, translations, and enhancing accessibility through audio descriptions.

The market for AI language services extends beyond broadcasting and includes government, enterprise, education, and entertainment sectors. Each of these industries has unique needs for language services, from live captioning and translations to complex workflows

Tony highlighted that one of the key drivers of market growth is the reduction in costs associated with AI-powered services compared to traditional human-based models. For example, automated audio description, which traditionally required 25 hours of human labor per hour of content, can now be fully automated, significantly reducing costs and making these services accessible to a broader range of content creators.

He also said that regulatory requirements for accessibility, such as mandatory captioning and audio descriptions, are increasingly pushing broadcasters and content providers toward adopting AI solutions. This trend further expands the market opportunity for AI-Media’s products.

As mentioned at the results briefing (or potentially earlier?) Tony outlined ambitious financial targets, including reaching $150 million in revenue and $60 million in EBITDA within five years. 

And he said they wouldn't need to raise capital to pursue this -- all the pieces are in place and growth can be driven by organic cash flow.

He certainly has his money where his mouth is, recently acquiring 5m more shares to lift his stake to almost 17% of the business (he bought at 31c -- not a bad trade so far!).

Anyway, it seems that AI-Media is a genuine market leader in a fast growing market that offers increased service and lower cost for its customers. It's well capitalised, cash flow positive, founder-led and expecting to 15x EBITDA in the next 5 years.

Shares are on ~27x EV/EBITDA

I don't presently hold in real life, but will be adding a watching position here on SM today.