This software company, impervious to AI, has never been cheaper
It is a buy?
Last week, we showed you a list of companies that we tested on AI resilience.
Some were classified as Fortress-like, meaning it would be difficult for AI to disrupt these companies. Others were classified as exposed, in which AI poses a much greater risk.
One company caught my eye in particular, and with its price down so much over the past 6 months, it was time to dive deeper.
For example, here’s what our AI agent, called “Hunter,” showed us for a company like Adobe:
A final score of 55% and a neutral rating.
Although the financials on the right side of the table look attractive, a neutral rating is tricky. That means margins might erode in the future. And we’re looking for exactly the opposite: a company that could benefit from AI, where margins might increase in the future.
In our article on software companies, we concluded that the impact is more nuanced than at first glance and that the playing field has fundamentally changed. Some companies' multiples have been corrected, rightfully so.
Others who benefit from this transition have seen the same contraction without it affecting their business. And this is the case with the following company. Misunderstood and wrongfully sold off by more than 40% from the ATH, even though:
Their pricing is tied to data volume and capacity, so as AI models generate massive amounts of new data, the taxable surface area grows.
They operate in a space where systems have to be deterministic and are not allowed to hallucinate
They launched an Agent Cloud, making them the coordination hub for AI safety and data integrity
On the financial side, the company has:
An average subscription dollar-based net revenue retention of > 120%.
Yoy revenue growth of >40% at over a billion $ scale
Net promoter score of >80
Gross Margins of 80%, thanks to its transition to a software pure play
at an EV/Sales below 8!
The company we’re diving into today received a Fortress rating. Only 8 out of 100 companies received such a high score.
After the downturn over the last 9 months, this company is now up 10% over the past week.
Is the company finally inflecting?
Is it time to hop on the train?
Let’s dive in.