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Equity research, Artificial Solutions: Enabling contact centre excellence through AI

10 Jun 2024

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The AI-powered software company, Artificial Solutions, has demonstrated its value proposition and growth potential. The refined growth strategy enhances its outlook. With a highly scalable business model and expectations of increased revenue growth and higher gross margins, Carlsquare Equity Research anticipates break-even to be approached in 2025 and a positive EBITDA result in 2026.

Conversational AI with high accuracy

Artificial Solutions (ASAI, or the company) has developed Teneo, a conversational AI software platform. Contact centres of large enterprises, such as Microsoft, use Teneo to build and run customised applications that automate query handling with market leading accuracy, reducing the cost per voice query handled to USD 0.4, from USD 6.0 if handled by an agent. Another crucial competitive advantage are the large-scale reference use cases that puts the company at the forefront.

Widened target client group to maintain NRR

The platform is offered on a SaaS business and delivery model. By the end of Q1 2024, the company had 20+ clients, of which 11 were SaaS customers and the remainder operating the platform as an on-premises software. Due to the nature of its key clients, Artificial Solutions has grown with its existing clients through increased usage, driven by factors such as geographical expansion, new languages, as well as by upselling of new features or use cases. Net Revenue Retention (NRR) measures revenue growth from existing clients, net of churn. The company’s abilities and value proposition are demonstrated by an outstanding NRR of 145% in 2023 and 141% in Q1 2024.

Artificial Solutions has recently changed how its sales team approach the market and widened its target client group to include SMEs (in addition to large enterprises). The objective of the strategic refinement is to grow the number of reference use cases applicable to large enterprises, inspiring them to continue upscaling usage. Year-to-date, two new clients have been signed.

Upside in share price given growth outlook

Since its transformation into an AI-powered SaaS business in late 2020, Artificial Solutions has seen net sales grow by an average of 25% over the last two years (2022-2023). In 2023, net sales grew by 32,6% to SEK 61m, while total ARR grew by 31.5% to SEK 63m. With great potential to further boost usage among existing clients, we anticipate a net sales CAGR, 2023-2026, of 42.3% and 46.7% for ARR. With an improved gross margin and a highly scalable business model, we expect break-even to be approached in 2025 and an EBITDA of SEK 35m, equivalent to a margin of 18.0%, in 2026.

Combining a DCF model with a multiple valuation, we calculate a fair value of SEK 1.0 per share. That corresponds to an EV/Sales NTM of 6.2x and EV/EBITDA 2026 of 15.9x. The full reference group trades at a median EV/Sales NTM of 4.7x and EV/EBITDA NTM of 17.4x. The difference is justified by expected growth and margin expansion.


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The analysts Markus Augustsson, Herman Kuntscher and Christopher Solbakke do not and may not own shares in the analysed company.

Equity research, Artificial Solutions: Enabling contact centre excellence through AI