Datametrex AI: Revenue Growth Continues to Accelerate
Datametrex AI Limited (TSXV: DM) is a security-focused technology company that is implementing proprietary artificial intelligence (AI) and machine learning-based solutions through its wholly owned subsidiary, Nexalogy and its world-class AI big data analytics engine. The company is focused on providing predictive and preventive technology solutions to several different business sectors.
Cybersecurity, telemedicine, and medical diagnostic testing are three sectors primarily covered by the firm. While these sectors appear somewhat diverse, they all involve security, be it from social media cyber threats, or medical security in the form of improved diagnostics for patient care, or providing much needed Covid-19 diagnostic testing kits in the fight against the global pandemic.
Datametrex AI earned its reputation in the AI field when its analytical engine was chosen to assist military and intelligence organizations in their cybersecurity efforts. The tech has been put to use battling social media disinformation campaigns, which are designed to inflame social divisiveness, mislead voters and influence elections. It’s military-grade technology has been in use with the Canadian, US, and NATO cybersecurity forces for the past five years. The company’s core AI technology can also be modified and adapted for use in a variety of industries.
What caught our attention is that, for a junior company, Datametrex is generating significant revenues from its operations. It recorded record revenue of $12.4 million in 2020, a 264% increase from 2019, with $8.2 million generated by Covid-19 testing kits.
Despite the impact of the pandemic, 2020 revenues from the AI and Tech division increased to $4.1 million, up from $3.4 million in 2019. Datametrex followed that up with record revenue of $19 million in Q1 of 2021, a 2,253% increase over Q1 2020, with net earnings of $9.6 million.
The company as a result is now cash-flow positive and has a very strong debt-free balance sheet, with over $4.6 million in cash and $4.9 million in marketable securities. This puts the firm in a very strong financial position, enabling it to consider strategies to further accelerate growth and build shareholder value.
Datametrex’s fortunes were unexpectedly enhanced in 2020 when it was able to source diagnostic testing kits via contacts overseas. The kits were proven to be effective for detecting the Covid-19 coronavirus, which quickly became a global pandemic and turned the global economy upside down. In a massive effort to curb the spread of the virus, governments everywhere turned to testing for the virus and procured testing kits from many suppliers.
Datametrex test kits, which have been proven to be effective in detecting the newer and more virulent variants, have been approved by multiple health regulatory agencies and the Company can sell its kits almost anywhere in the world. On July 8, 2021, Datametrex announced that it conducted approximately 62,000 COVID-19 tests for the Canadian film and production industry and sold over 50,000 of its 1Copy PCR test kits during the second quarter.
Elsewhere, on June 21, 2021, Datametrex announced the completion of its strategic acquisition of Medi-Call, a private British Columbia telemedicine company. Telemedicine is a rapidly growing segment of the healthcare industry, enabling physicians to connect with patients via telephone or video conferencing to conduct routine consultations, patient screening, and preliminary diagnostics. This type of service is of great benefit in rural, isolated or remote areas where transportation can be difficult and very time-consuming.
Medi-Call is a fully-integrated mobile platform that offers on-demand medical services via geo-located physicians in real-time, which allows for online, encrypted and virtually-enabled medical consultations. For patients, the online system enables real-time tracking of the progress of their health care provider, and for physicians, it enables follow-up diagnostics, clinical deterioration, and re-assessments in real time, which should lead to faster and better health outcomes. Datametrex will integrate its AI technology into the Medi-Call platform to further enhance the diagnostic capabilities and services that the system provides.
The Covid-19 pandemic underscored the need for telemedicine due to lockdowns and restrictions on doctor and hospital visits. The pandemic has essentially altered the way many medical services will be delivered once the pandemic has diminished. Both patients and medical personnel have experienced the time-savings, reduced commuting and travel, reduced costs, increased efficiencies and other benefits of telehealth, and many methods of service delivery that were born of necessity during the pandemic may become the new normal going forward.
Datametrex AI Ltd represents an unusual situation for a junior company. The company has been recording record revenues and earnings during the past year, much of that coming from sales of Covid-19 testing kits. Despite the massive global vaccination efforts to date, new variants are emerging as the virus mutates, therefore the need for Covid testing will likely continue for the next several years, which should continue to benefit Datametrex’s revenues and profitability.
The revenues from the cybersecurity division continue to gain traction and its importance in the fight against social media disinformation efforts will only become greater. Telemedicine received a major boost in credibility and public acceptance due to the pandemic, and it is expected to become a normal, widely accepted methodology for patients to connect with their primary medical care providers.
With 352.8 million shares outstanding and a relatively modest market capitalization of $70.6 million, and strong revenue and earnings growth, Datametrex AI represents a somewhat de-risked growth company. The management team has extensive experience in artificial intelligence, medicine, cybersecurity, big data analytics, medical diagnostics and have held senior executive positions in both public and private companies.
The firm has a strong, debt-free balance sheet and a solid cash position. If historical reporting dates apply, shareholders can likely expect the company’s Q2 financials to be released sometime over the 4-6 weeks. It would not be too surprising, if revenue and profit growth continues to accelerate, that the Company considers a move to a more senior stock exchange at some point, which could bring more institutional interest to the name.
FULL DISCLOSURE: DataMetrex AI Limited is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover DataMetrex AI Limited on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.