The company’s goal is to achieve financial independence by the end of 2027 (though this might be updated tomorrow). What does financial independence actually mean in this context? If it refers to cash flow positivity, then with the current cost structure, the company’s revenue would have to explode multiple times over from the current level in just over a year. Where and how does the company see this explosive revenue growth coming from?
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Thanks for the questions. I will try to bundle them into a coherent package for the interview. We should have the video out by early afternoon at the latest.
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Perhaps you could also ask how on earth it was decided to establish a Customer Success team only now? You would think it’s a basic requirement from the start in a usage-based business model that customers are taught and supported in using the product as much as is reasonable.
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Yes, and it just continues. Shareholder value is at the bottom of the sea, and the board approves results like this. Something needs to be done, since we have a world-class AI application for cancer screening, but it doesn’t show in revenue growth. A product development company with good compensation and option programs. Now they are looking for a new commercial director. What have the CEO and previous sales guys been doing? Sales for a company of this size should be handled by the CEO, and over 2 million has been paid in salaries and bonuses over 5 years. At the same time, numerous share issues and over 10 million of owners’ money burned per year.
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My interpretations of the report:
- Hobbyist activities are moving along briskly with a lot of good buzz going on. Too bad you can’t make money with this.
- Product development practically means salaries. It makes my neck hairs stand up at the thought that the company will secure an EIP loan and use it for product development, i.e., salaries.
- Additional investments in sales sound expensive.
- Not a word about the cash situation or its monitoring/preservation. The company’s management likely expects to get more money from the major owners again just by asking.
- By next spring at the latest, they will need to raise more money through a share issue to pay salaries and keep the lights on at the office.
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My own take: it would be much more interesting to get the Chairman of the Board in an interview rather than the CEO, because the biggest questions are what exactly is being attempted here, not how.
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It speaks to the inefficiency of the market that the company’s market cap is still over 40 million. The valuation would be mind-boggling for a company burning 5+ million a year, with ARR (jatkuvalaskutteinen liikevaihto) of 3.5 million and growing at 20-30% a year. Now that the aforementioned isn’t even true, the market cap makes no sense at all. If they have actually developed valuable IPR, someone might perhaps pay ten million and wind down operations for the most part.
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I don’t really understand this: Aiforia says it has won tenders it has participated in, but at the same time, a sort of implementation trap means the money isn’t coming in. What’s going wrong with the implementation?
If installations and integrations are delayed, the billing for ongoing use is delayed as well.
Where is the bottleneck in this whole picture? It can’t be the product if they are winning pretty much all the tenders they enter.
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I’ll reply to myself as well: Healthcare is likely an industry where change happens slowly - and this will continue through 2027-2028?
- if implementation pipelines into hospital IT systems are months-long projects, the transformation of work into AI-driven workflows will be even slower regarding work processes.
In theory, the ketchup bottle could burst, but if this plays out in a way where order books are bulging but realized revenue lags - then a small company will be in chronic liquidity trouble.
What is the company’s ability to help turn implementations into revenue-generating projects?
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A company like this shouldn’t be on the stock exchange. It should grow its business to a slightly more credible level first and then list. Well, there’s no shortage of fools willing to put money into something like this, myself included.
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How did that revenue drop so much then? Was the reason that billing for new customers only starts in H2? But weren’t the existing customer relationships on recurring billing? If so, revenue surely shouldn’t drop that much.
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I have already started criticizing the company for not reporting recurring revenue until I learned through an Inderes interview that the CFO stated orally that 98% of the revenue was recurring. Why on earth doesn’t the company highlight this in their report and written communications?!! This is the whole point of SaaS-type business. In my opinion, this also patches the logical gaps that have formed in the company’s external operations and brings credibility to the claim that revenue collapsed because implementations were delayed. In other words, the non-recurring items of the comparison period were left out.
I also received an answer to what financial independence means in this context. It means that if the money runs out, you can get more. Personally, I wouldn’t call a situation where a loss-making company runs its operations on borrowed money “financial independence.”
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Well, some people even take out investment loans to manufacture losses.
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A bit strange that revenue is cut in half at the same time the number of diagnoses is growing strongly vs 1H2025…
A significant part of our business is based on recurring revenue solutions, which is why a new order does not turn into revenue immediately after the contract is signed. Recurring revenue only begins to accumulate once the solution has been deployed in clinical work and pathologists begin utilizing it as part of diagnostics. Our goal is indeed to accelerate the deployment of our products and thus speed up the conversion of the order backlog into revenue as efficiently as possible. I am extremely pleased that the number of diagnoses made by our customers has grown strongly compared to the corresponding period last year. This proves that the utilization rates of our clinical products are increasing, which supports the development of our future recurring revenue.
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An interesting interpretation of financial independence. Perhaps that’s the view in the hustle/startup scene (pöhinä-skene)?
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I would have hoped for a bit more of a real challenge in the CEO’s interview, having hung around here for quite a while with a fairly sizable position. Following this now definitely requires thick skin. There seems to be a huge buzz in the sector, but it’s painful when contracts are signed and partnerships are built without thundercloud-colored banknotes actually hitting the account. Of course, my own gaze has been set a few years out, and I plan to keep my holdings, if not add to them. Wasn’t it the rule that when there’s blood in the streets, you buy more—even though I dismissed these stock market clichés as nonsense earlier?
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The CEO’s (toimari) demeanor is definitely a bit arrogant, along the lines of “don’t you people get it now.” The profit warning (negari) really pissed me off, but today has calmed me down enough that I went and tanked up on more shares, even though I was thinking of putting additional purchases on hold until the company’s financial position becomes clearer. To me, this smells a bit like an overreaction again. This shouldn’t be taken as any kind of investment recommendation, since I am clinically a moron :D.
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And here is the interview as well. 
Aiforia’s H1 revenue was in line with the July profit warning, but earnings were weighed down by higher-than-expected personnel costs. The financial position strengthened thanks to the share issue and the EIB (European Investment Bank) venture debt agreement. Aiforia CEO Jukka Tapaninen discusses the early-year developments in an interview with analyst Antti Siltanen.
Topics:
(00:00) Introduction
(00:09) Summary of the early year
(00:55) Revenue development and dynamics
(03:09) Order backlog
(03:55) Strengthening sales
(05:03) EIB financing
(06:31) Cash sufficiency
(07:35) Mayo Clinic customer relationship
(08:37) Competitive landscape and operating environment
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A good thing about EIP financing is the positive feedback loop: growth triggers an agreed-upon milestone (the criteria for which have not been communicated), which releases a new loan tranche to be drawn down, which drives the development of more models and sales, which further accelerates growth. Rinse and repeat.
Not a single customer has been lost so far, the use of different models by customers is growing, Aiforia is constantly creating new models, the number of customers is growing (Paris, new hospitals in Spain), and implementations are progressing now that the Italians finally got their scanners, so it doesn’t look too bad. One can, of course, be concerned about the slope of the growth curve.
The decrease in revenue seen now is due to the fact that new contracts generate revenue steadily rather than upfront like before, with a large lump sum at the beginning. Therefore, it is unfair to compare this H1 to previous years.
If the H1 seen now is the baseline going forward, so be it, because it is easier to improve on a weak result than a strong one. There has to be some starting point against which development is compared. Surely there has been no accounting trickery here, but rather an agreement with the EIP on how revenue will be measured in the coming years. And the implementation delay, as another reason for the drop in revenue, also means that the money is definitely coming and will show up then.
One more good point. Both the CEO and the Chairman of the Board are shareholders with their own money, so in their decisions they also consider the interests of legacy owners. The EIP loan is of that nature, even though it has its financial costs (interest and synthetic warrants).
Webcast transcript: Inderes
Aiforia’s expansion into predictive models (which is inevitably the future) has already been underway, but also into image management and workflow? It would certainly be an advantage for the customer to get as many parts of the diagnostic process as possible from a single provider.
Targets remain unchanged, even though the market got spooked
this
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