REG - Insig AI Plc - Trading update

Insig AiAnnouncement

03/11/2022 07:00

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RNS Number : 1431F  Insig AI Plc  03 November 2022

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3 November 2022

 

Insig AI plc

("Insig AI", the "Company" or the "Group")

Trading update

Trading update and revised guidance with profitability now expected from Q2
2023

 

Insig AI plc (AIM:INSG), the data science and machine learning company, today
announces a trading update and revised guidance resulting in expected
profitability being generated earlier than previously forecast by management.

 

In the Company's final results published on 9 September 2022, the Company
stated that a number of contract wins were anticipated to close before the end
of October. On 30 September, the Company announced that it had won a contract
with a value of £200,000.

 

Two weeks after the publication of the Company's final results, the
"mini-budget" took place. As widely reported, this resulted in a sharp rise in
borrowing costs, an unprecedented sell-off in UK index-linked government
bonds, significant uncertainty and liquidity concerns in the pensions
industry. Given Insig AI's focus on the asset management industry, this
resulted in a number of our prospects understandably prioritising dealing with
the impact on their businesses of sudden market turmoil. As a result of this
recent unexpected wave of uncertainty, a number of contracts within our
pipeline did not close by 31 October, however, many of these remaining
prospects remain active.

 

Over the last 12 months, the Company has invested heavily to build a
repository of machine learning ESG company disclosures on more than 2,500
global businesses. Our database now includes constituents of the S&P 500,
the STOXX 600 and the FTSE 100/250/350 together with hundreds of non-listed
corporates. The Company is confident that this repository can be utilised to
deliver a long term revenue stream. Having secured this capability, the
Company is now able to flex more of its costs based on orders received.
Accordingly, the Board has taken the decision to substantially reduce ongoing
costs in relation to the building of the repository of disclosures and the
integration of the data filings capabilities.

 

The Board recognises the nascent nature of the ESG space and whilst improved
disclosures and an end to greenwashing will be both welcome and inevitable,
timings remain uncertain. Having now achieved critical mass within the 'stocks
universe' with our repository and the resultant reduction in headcount and
other costs noted above, the Board is able to prioritise and accelerate the
timeline to expected profitability of the Group. As announced in September
2022, our focus is firmly set on: fintech data science solutions, new fund
launches with associated sharing of management fees and selling our ESG
proprietary scoring and comparison capabilities to the corporate market.

 

In March 2022, the Company provided revenue targets, which included asset
managers as direct buyers of the ESG scoring tool and of data filings. Given
the specialised nature of these data filings and our preference to partner
with asset managers on new fund launches and fintech data science to generate
improved alpha, that to achieve those revenue targets, significant further
investment and cost would be required. The Board is therefore reducing these
targets and, in turn, any associated costs of investment are now expected to
result in an improved return on equity as well as higher operating margins.

 

As previously announced, with the receipt of the R&D tax credit, together
with the convertible loan note facilities provided, it was expected that there
would be sufficient working capital through to Q2 2023. The Board now believes
that no further working capital will be required to support the operations of
the business in the short and medium term, as the business is expected to
become cash flow positive from Q2 2023 as a result of the cost cutting actions
taken. Moreover, the Board also notes as per the announcement on 4 May 2022,
the terms of the initial convertible loan note provided by Richard Bernstein
stated that the loan was repayable on or before 31 December 2022. Whilst no
formal agreement has been made, the Board is in positive discussions with Mr
Bernstein to extend this repayment date, however, should the loan become
repayable on or before 31 December 2022, the Company would need to raise
additional capital.

 

Colm McVeigh, Insig AI's Chief Executive commented: "With recent uncertainty
in the asset management and funding markets having increased significantly, we
must adapt and accelerate the timing of profitability.  Whilst it would have
been ideal to have continued to expand our coverage into more smaller
companies, the return on this investment would extend beyond our appetite. We
prefer to focus on becoming cash positive sooner, which we hope to achieve in
Q2 2023."

 

 

For further information, please visit www.insg.ai (http://www.insg.ai/)  or
contact:

 Insig AI plc                                                         Via SEC Newgate

 Colm McVeigh (CEO)
 Zeus (Nominated Adviser & Broker)                     +44 (0) 20 3829 5000

 David Foreman / James Hornigold / Danny Philips
 SEC Newgate (Financial PR)                            +44 (0) 7540 106 366

 Robin Tozer / Richard Bicknell                        insigai@secnewgate.co.uk

 

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