Interim Results

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. It forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain. 

22 December 2021

Insig AI plc

("Insig AI" or the "Company")

Interim Results

Insig AI plc the data science and machine learning group, is pleased to announce its interim results for the six months ended 30 September 2021.

Highlights:

·    Company transformed by reverse takeover of AI/machine learning business Insight Capital Limited. Repositioned as a SaaS product business model from a pure technology consulting solutions provider

·    Secured contract with Carval Investors L.P ("Carval") to support its ESG Collateralised Loan Obligations fund launch

·    Group revenue of £0.9 million (H1 2020: £0.2 million)

·    Group operating loss pre-exceptional items of £0.5 million (H1 2020: £0.3 million loss)

·    Net cash at 30 September 2021 of £2.3 million, excluding £0.7 million R&D tax credit received post period end

Post period-end:

·    Three contract wins, added further capability and data to assist Royal London Asset Management

·    Appointment of Colm McVeigh as Chief Commercial Officer

·    Successful completion of acquisition of FDB Systems Limited

Commenting, Insig AI's Chief Executive Steve Cracknell said: "Each month continues to be busier than the last and I fully expect this to continue. Since 1 October, we have released Insig Portfolio 2, delivered our ESG scoring solution to Carval, appointed Colm McVeigh as Chief Commercial Officer, completed the acquisition of FDB and closed three new contract wins, two of which we have already announced.

"I am pleased to report that both in the coming quarter and beyond, I expect this momentum to build very significantly.  We have multiple opportunities: within the asset management industry, most notably for our ESG data scoring, bespoke ESG solutions, corporate sales and our data sourcing and machine learning analytics. Our Portfolio Insights tool can now be incorporated into our ESG solutions. We are also excited to progress our partnership revenue share opportunities, where the scale of revenue streams can be a multiple of a Software as a Service sale. Beyond the asset management industry, the 4Bio contract win has shown that we are able to apply our machine learning capabilities to other sectors. In the New Year, I hope to be able to provide further evidence of our ability to sell to another vertical. The coming quarter and 2022 should demonstrate our ability to secure multiple contract wins, as we successfully leverage our machine learning technology and exploit it, so it fuels fast growing and increasingly higher margin revenues. I look forward to a very exciting 2022."

For further information, please visit www.insg.ai, or contact:

Chairman's Statement

The period under review includes the new strategic focus on artificial intelligence and machine learning, culminating with the acquisition on 10 May 2021 of the entire issued share capital of Insight Capital Partners Limited ("Insight").

Since becoming interim Chairman in mid-August, my immediate task was to take stock of the business and to objectively assess its strengths, opportunities, weaknesses, and threats. Very quickly, a key priority emerged: to better commercialise the business. Insig AI has a clear focus in terms of technology: data science and machine learning. Its technology is strong and impressive. This is a necessary condition for commercial success. However, without good commercial structure and discipline, it is not a sufficient condition. That is why the appointment in November of Colm McVeigh as Chief Commercial Officer is so important. The business is already benefiting from his experience, structure, and professionalism.

Recently, Insig AI has demonstrated the quality of its client base with important business wins including from global alternative investment manager CarVal Investors L.P. ("CarVal") and Royal London Asset Management. I believe that some context is important. Insig AI is a relatively small team: the data science machine learning is a team of just 32, with 23 focussed on product delivery. Last year's pivot from consulting to developing product led solutions with a robust technical infrastructure was essential. The priority has now switched to converting this data infrastructure into scalable revenues.

Since May, the business has been very largely focused on delivering ESG scoring tools to support CarVal's risk scoring methodology. Significant resources were deployed to ensure delivery was achieved on time. CarVal's Clean Collateralised Loan Obligation Product Line is a ground-breaking product. Insig AI can be proud that it has a client of the calibre of CarVal.

Since the end of September, there have been further customer wins. Last month, the business signed a proof-of-concept exercise with a European asset manager with assets under management ("AUM") of several billion Euros. Insig AI is using its machine learning data and expertise to analyse and categorise the client's portfolio. The objective is to use a combination of linear and non-linear analysis methods to surface and understand relationships within the client's investment datasets comprising approximately 2,000 companies.

Earlier this month, the business secured a five year "software as a service" ("SaaS") agreement with 4BIO Partners LLP ("4BIO"), a leading international venture capital fund targeting advanced disease therapies. Using Insig AI's proprietary machine learning classifiers, and its deep domain expertise, 4BIO will be able to quickly analyse up to 32 million medical publications that contain disease research to identify patterns and trends to inform future investment decisions and venture creation. This contract win demonstrates the scalability of our AI data solutions beyond the asset management industry. The business is currently in discussions with another vertical, which it is hoped will lead to a contract win prior to our March year end.

I'm also pleased to report that recently, Insig AI has successfully added further capability and data to assist Royal London Asset Management, which has resulted in an expansion of our hosted financial analysis solution with associated recurring revenues.

Whilst it is widely accepted that contract wins of significant size are rarely quick, it was apparent that in order to accelerate that cycle, eliminating the wait to obtain a potential client's portfolio associated data needed to be addressed. That is why the FDB Systems Limited ("FDB") acquisition is important. FDB specialises in structuring data, which is the process of transforming raw data so that it can be more easily and effectively used as an input to machine learning, data science and AI processes. Combining FDB's technology with our machine learning and analysis tools creates a world-leading aggregator of ESG information. Providing prospective customers with ESG tagged structured data makes it more attractive and valuable, which we believe will result in accelerated sales. With a fast-growing client list, as well as cross-selling opportunities, we're excited that FDB is now part of Insig AI. The integration of both the business and the team is proceeding well.

Richard Bernstein

21 December 2021

Chief Executive's Review

During the period under review, we invested heavily in our data infrastructure and product platform. This was to enable us to produce and sell quality, scalable software solutions aimed at the asset management industry. This was the basis of the reverse takeover back in May and was consistent with our long-term strategy to shift away from undertaking only high value technology solution consulting engagements so that we could pivot to become a product focussed business.

Historically, the business delivered strong and growing consulting revenues. When clients buy consultancy services, they are effectively buying into the people delivering the solution. Software as a Service (SaaS) product sales however have a completely different sales process. We have been building the different skill sets and processes within the business which are required to secure this stickier and more valuable revenue. These include customer workshops, pre-proposals and proposals. Having scalable offerings enables us to accelerate sales growth. This is the right approach to build shareholder value.

The transition from providing pure technology consulting solutions to becoming a SaaS product business model required a strong technical infrastructure and sticky product offering to underpin our future sales growth. As expected, this impacted short term revenues, with during the period, core machine learning business generating revenues of £0.2 million. Since the start of our second half, in line with management expectations, we have already seen much improved revenue, with the emphasis on SaaS product sales. Securing SaaS contracts can take time, for a host of reasons, but given tangible progress on several pipeline contracts in recent weeks, I am confident that these will be secured early in the New Year, as we see increasing interest in our ESG scoring and data screening capabilities.

I am pleased to report that our projections for the coming quarter and beyond, see a significant ramp up in revenues. Recognising that our shareholders would like greater clarity on Insig's penetration of and growth trajectory in our target markets, as soon as the Company has secured some of these near-term opportunities and has as expected, increased its base of run-rate revenues and demonstrated a track record in converting opportunities from initial conversations, through trials to initial commercial agreements, we will be in a position to communicate the size and value of our near term and longer term pipeline as well as other related financial KPIs.

It is the Board's intention to release a year-end trading update in April 2022 outlining what we believe to be the relevant KPIs for Insig AI and how we aim to address each of them.

Including our Sport in Schools business, Group revenue was £0.9 million and the operating loss for the period before exceptional items which related to the cost of the reverse takeover was £0.3 million. Whilst our core focus is on the machine learning business, it is encouraging to note the resilience of the Sports in Schools business and its operating profitability.

At 30 September 2021, net cash was £2.3 million. This excluded a receipt of £0.7 million in relation to our R&D tax credit.  This was received after the period end.

It is rare for a business to be in the right place at the right time. We are at the intersection of ESG and the AI market. The demand for data driven tools has been further amplified by the global focus on ESG investing and regulation.

As a tech company, we are well set up to enable our team to work remotely. When Covid hit and lockdown was enforced, the transition to home working appeared seamless. Whilst our machine learning tools do not require personal interaction, when it comes to creativity, we all benefit from not being confined to a virtual means of communication. Whilst this is of course beyond our control, I hope that 2022 will see a return to normality.

Having the necessary skills to take advantage of what the market opportunity has to offer is essential. I am therefore delighted that Colm is now our Chief Commercial Officer. He has already demonstrated his worth, using techniques to better showcase our technology, but crucially, other steps to both accelerate as well as improve the likelihood of moving from product trials to contracted revenues.

I am proud of the work that we have delivered to CarVal and I'm hugely excited about supporting its business in 2022. This is a huge and important opportunity for Insig AI. Whilst CarVal is clearly a market leader, when it comes to ESG, the US market lacks the appetite that we have seen in the UK, France and Germany. Therefore, for 2022, these markets will be our geographical focus.

In terms of personnel, we have a rich source of talent. However, at 32, numerically, our team is small. In recent months, much work has been done to focus our team and allocate our resources efficiently. We have been putting the tools and people in place to do so. I fully expect further hires will be required in due course but will be muted in the second half of the year, whilst we focus on converting the current pipeline. However, by the summer, we will likely continue to expand assuming the business case supports this.

Our objective and focus is clear. Revenue that is scalable, repeatable, and growing aggressively. We are now well positioned to deliver on this objective.

Current trading and outlook

Each month continues to be busier than the last and I fully expect this to continue. Since 1 October, we have released Insig Portfolio 2, delivered our ESG scoring solution to Carval, appointed Colm McVeigh as Chief Commercial Officer, completed the acquisition of FDB and closed three new contract wins, two of which we have already announced.

I am pleased to report that both in the coming quarter and beyond, I expect this momentum to build very significantly.  We have multiple opportunities: within the asset management industry, most notably for our ESG data scoring, bespoke ESG solutions, corporate sales and our data sourcing and machine learning analytics. Our Portfolio Insights tool can now be incorporated into our ESG solutions. We are also excited to progress our partnership revenue share opportunities, where the scale of revenue streams can be a multiple of a SaaS sale. Beyond the asset management industry, the 4Bio contract win has shown that we are able to apply our machine learning capabilities to other sectors. In the New Year, I hope to be able to provide further evidence of our ability to sell to another vertical. The coming quarter and 2022 should demonstrate our ability to secure multiple contract wins, as we successfully leverage our machine learning technology and exploit it, so it fuels fast growing and increasingly higher margin revenues. I look forward to a very exciting 2022.

Steven Cracknell                                                                              

21 December 2021