TOP IDEAS: AirIQ Inc.’s (TSXV: IQ)
business operations show momentum and the numbers—both top and bottom line
—prove it. The stock is up 375% and still holds value.
Over the years, if you track
Investorfile’s blog posts about AirIQ, we were steadfast bullish about this
Company as a small cap value investment. That said, the current stock price of
AirIQ is up 375 % in value since we first recommended the Company as one
of its Top Ideas (See: AirIQ is a technology company small in size but the stock is
big in value). It should come as no surprise that this investment
blog remains bullish on AirIQ’s prospects going forward for growth investors.
AirIQ Inc. (TSXV: IQ – C$0.38) has
operated in the growing telematics industry for over 25 years, as the
Company has been providing Global Positioning Service (GPS) solutions to
customers throughout North America. The Company considers itself as a pioneer
in IoT-based asset management solutions.
AirIQ offers an intuitive
web-based platform that provides fleet operators and vehicle owners with a
suite of asset management solutions to reduce cost, improve efficiency and
monitor, manage and protect their assets. Services are available online or via
a mobile app, and include instant vehicle locating, boundary notification,
automated inventory reports, maintenance reminders, security alerts and vehicle
disabling and unauthorized movement alerts. Therefore, its solutions allow
commercial businesses to reliably, effectively and efficiently monitor assets
in near-real time.
The Company’s solutions are
mixed fleet-capable and provide fleet reporting, maintenance, compliance,
safety and analytics, utilizing multiple hardware options, including a fully
integrated video telematics camera solution and a battery-powered solution for
Last month, the Company reported
its annual financial results for fiscal 2023 (which ended on March 31st).
Total revenues for the year were up 16% to C$5.05 million, of which about
C$4 million is deemed recurring revenue. (It should be noted that when AirIQ wins orders for its suite of asset management
solutions, it has two distinct revenue components. The hardware component is
revenue which is earned on delivery, while the GPS and video surveillance
monitoring is recurring revenue.) The recurring portion of revenue was up
13% from the year prior.
During 2023, AirIQ earned EBITDA
margins at a rate of about 21% of revenues.
Excluding a one-time deferred
income tax recovery, net income was $863,236,which was an increase of 52%
from the prior year period. The net income equates to about C$0.03 earnings per
share for fiscal 2023.
While our optimism about the
Company’s future is partially based on AirIQ’s fiscal 2023 results, last
week the Company reported Q1 results for fiscal 2024,which headlined
record recurring revenue and net income. This provides us more evidence as to the momentum
which is occurring in AirIQ’s business operations.
In Q1, the Company’s total revenue
increased by 42% to about C$1.8 million, of which recurring revenue was C$1.1
million, up 16%. The record-setting quarterly net income for the Company
was $350 thousand, or C$0.012 per share. EBITDA margins increased to 26% in
Encouraged by Q1 results, we reconnected
with the Company’s CEO to ask about the recent sales trends. We were informed
by the CEO that there has been a notable increase in the number of thefts of
high-value assets in recent times, which has led to an increase in investments
by its customers in the asset protection solutions AirIQ offers.
While all of AirIQ’s key
performance metrics showed increases compared to the year prior, the Company
also continues to maintain a very strong balance sheet and working capital
ratio. As of June 30, 2023, AirIQ held C$2.8 million in cash and had no debt.
Investorfile acknowledges that
AirIQ’s stock price today is trading near its post consolidation all-time highs. But, based on Q1
financial results, the growth in the recurring revenue base and outlook, we
believe there is still value in the stock to be had. We calculate that today
the stock trades at valuations that are less than 10 times earnings and 5 times
Enterprise Value (EV) to EBITDA. That said, AirIQ’s stock can support even higher
trading prices which is good news for small cap investors. For us, AirIQ was
always a buy and still is today.
AirIQ has approximately 29.3
million shares outstanding.
The Company's website:
Author's share ownership
disclosure: IQ – Yes
Investorfile's share price
accumulation target of $0.20 for AirIQ Inc. was initially reached on July 5th,
This article is for informational purposes only. This article
is based on the author's independent analysis and judgment and does not guarantee
the information's accuracy or completeness. The information contained in this
article is subject to change without notice, and the author assumes no
responsibility to update the information contained in this article. The
information contained within this article should not be construed as offering
of investment advice. Those seeking direct investment advice, should consult a
qualified, registered, investment professional. This is not a direct or implied
solicitation to buy or sell securities. Readers are advised to conduct their
own due diligence prior to considering buying or selling any stock.
Investorfile.com is not engaged in an investor relations
agreement with AirIQ Inc. nor has it received any
compensation from AirIQ Inc. the preparation or distribution
of this article.
The author of this article has acquired and may trade shares
of AirIQ Inc. through open market
transactions and for investment purposes only.