NEW YORK - Guardforce AI Co., Limited (NASDAQ: GFAI, GFAIW), an integrated security solutions provider with a focus on AI and Robotics-as-a-Service (RaaS), has announced a significant increase in its financial performance for the first half of 2024. The company reported a 50% rise in gross profit compared to the same period last year, driven by improvements in gross profit margin and a positive shift to adjusted net income.
For the first six months of 2024, the gross profit margin increased to approximately 18.4%, up from 12.0% in the first half of 2023. This improvement was partly due to strategic cost-control initiatives and a growth in higher-margin businesses, such as Guardforce Digital Machine (GDM), which saw a revenue increase of 74.3% compared to H1 2023.
The company's selling, distribution, and administrative expenses saw a significant decrease of 25.7%, contributing to an operating loss reduction of 82.5% to approximately $2.1 million in H1 2024. Adjusted net income (Non-IFRS) turned positive at roughly $0.1 million, a notable improvement from the adjusted net loss of approximately $1.8 million in the prior year.
During this period, Guardforce AI consolidated its legacy business, securing long-term contracts with key clients and expanding its retail client base. Notably, Guardforce Cash Solutions Security in Thailand won a 5-year contract to operate a Consolidate Cash Center in Chiang Mai, becoming the largest CCC operator for the Bank of Thailand with 50% of its operations.
The company also made significant strides in its AI technology, developing GFAI Agents as the core technology foundation for AI-driven travel and purchase solutions. These efforts have expanded services to over 25,000 retail stores, providing a solid foundation for Guardforce AI's goal of becoming a leading AI solution provider.
Despite the positive developments, net revenue decreased slightly by 2.4% to approximately $17.6 million due to the impact of foreign currency exchange rates. However, revenue from the secured logistics business increased by 5.2% compared to H1 2023.
Guardforce AI's Chairwoman and CEO, Lei (Olivia) Wang, expressed satisfaction with the company's transformative journey and its focus on developing AI solutions tailored for the retail and travel sectors. The company's achievements in the first half of the year are seen as laying the groundwork for continued growth and a sustainable business model.
As of June 30, 2024, Guardforce AI had cash and cash equivalents and restricted cash of approximately $15.5 million, positioning the company to pursue further growth and development in its specialized sectors.
This article is based on a press release statement from Guardforce AI Co., Limited.
InvestingPro Insights
As Guardforce AI Co., Limited (NASDAQ: GFAI, GFAIW) celebrates its financial performance gains in the first half of 2024, investors and industry watchers are closely monitoring its market position and financial metrics. The latest data from InvestingPro provides some key insights into the company's financial health and stock performance.
The company's market capitalization stands at a modest $11.44 million, reflecting its size and investor valuation in the current market. Guardforce AI's Price / Book ratio, at 0.45 as of the last twelve months ending Q4 2023, suggests that the stock is trading at a low multiple of its book value, which can be an indicator of undervaluation. This is one of the InvestingPro Tips that highlights the company's current market perception.
Despite a reported 50% rise in gross profit for the first half of 2024, the company's Gross Profit Margin for the last twelve months, as of Q4 2023, was at 4.2%, which points to challenges in maintaining profitability. This aligns with another InvestingPro Tip that Guardforce AI suffers from weak gross profit margins.
Investors should also note the company's stock price volatility. Over various periods leading up to the present, the stock has seen significant declines, with a 1-month price total return of -20.69% and a 6-month return of -67.79%, underscoring the stock's unstable trajectory.
For those considering an investment in Guardforce AI, the company's financials and stock performance provide a mixed picture. While there are signs of potential undervaluation, the challenges in profitability and stock stability cannot be overlooked. For a more comprehensive analysis, there are over 15 additional InvestingPro Tips available at https://www.investing.com/pro/GFAI, offering deeper insights into Guardforce AI's financial standing and future prospects.
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