For many investors, backing proven stock pickers can deliver mammoth returns. Just look at the Berkshire Hathaway investors that assign Warren Buffett to invest for them. But when it comes to artificial intelligence, younger heads may be the ones to follow as evidenced by AI company UNITH (ASX: UNT) which develops digital humans and reported a big boost in their AI investments.
As the creators of their Digital Human platform, which has already been licenced by a Big 5 Tech company, UNITH reported a big boost in their investments when releasing their FY23 Annual Report.
The investments date back several years when UNITH commenced developing their platform through a partnership approach, taking equity stakes in some established AI businesses. These strategic stakes in Aflorithmic Labs and In The Room Global have delivered a substantial profit across the year.
Over the past 12 months, the fair value of their 10% stake in Aflorithmic Labs increased from $0.56m to $1.96m (+246%). Specialising in synthetic audio, Aflorithmic was initially engaged by UNITH for their voice cloning capabilities which have been integrated into the Digital Human platform, but since that investment in 2021, Aflorithmic has grown even further to have commercialised their own Audio-as-a-Service platform tailoring for a range of other AI companies.
Delivering an even greater gain, UNITH held convertible notes of In The Room Global (previously Forever Holdings) as a $92k investment made in 2020. Since then, In The Room has significantly advanced its one-to-one digital encounters between an influencer and any follower who wants to converse with them. With that progress, UNITH elected to convert their notes on 30 June 2023 for £125,000 at the predetermined conversation price of £1.29 per share.
As of 30 June 2023 however, fair value of those shares were £6.44 according to auditors, valuing UNITH’s stake at $1.87m, a substantial increase on the value of $88k last year.
Both businesses were identified by UNITH as valuable tech for their own platform which generates AI-powered digital humans. These digital humans can perform common business functions at a fraction of the cost of traditional labour, and can work 24/7.
Capitalising on the growth of AI in business, FY23 was a breakout year for UNITH which signed a variety of clients beyond the Big 5 Tech company, in industries spanning healthcare, gaming, entertainment and insurance.
“Advancing the Digital Human platform over the past 12 months, we have gained valuable insights into the use cases where businesses can best improve their own bottom lines through the use of AI and digital humans that work 24/7 and can engage in multiple conversations at once,” said UNITH CEO, Idan Schmorak.
“These valuable insights continue to assist our commercial team in targeting new clients which include the three signed in the first two months of FY24.”
Interest in AI over the past 12 months was driven by ChatGPT, technology which is already integrated into UNITH’s Digital Human platform which will soon be made available more broadly. According to the Company’s Technology Road Map, they are on track to launch a self-service platform which will enable any business to generate their own digital human, and program them to work with a simple user interface.
The self-service platform is expected to be a gateway for acquiring clients that wish to upgrade to a commercial licence that has more features such as concurrent conversation, additional languages, visual customisation and enhanced service capabilities.
Across FY23, UNITH reported $4 million in revenue and $0.2m EBITDA with $4.2m in cash on hand as of 30 June 2023 and zero debt.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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