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AI

Artificial Intelligence Technology Solutions Inc. (AITX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2026 is in progress (Sept–Nov 2025); no quarter results have been reported yet. The latest filed quarter (Q2 FY2026, ended Aug 31, 2025) showed net income of $0.76M, driven by a $4.37M debt-settlement gain, and continued top-line growth (+41% YoY for the quarter) .
  • Management delayed the target for achieving positive operational cash flow to April–May 2026 from “during or shortly after” fiscal Q3 (Sept–Nov 2025) previously, citing recurring revenue momentum and SARA monetization, disciplined OpEx, and RAD-G contributions .
  • Operational updates during Q3 include a Fortune 500 manufacturer win (initial RIO Mini deployments in the U.S. and Canada, potential for ~200 units) and RADCam Enterprise commercial launch, expanding AI agentic camera capabilities into enterprise VMS-integrated markets .
  • Key stock narrative catalysts: trajectory to operational cash flow, debt reduction plans (substantially all debt in 12–18 months), and enterprise channel expansion for AI-driven security solutions; the guidance reset on cash flow is the notable near-term narrative swing .

What Went Well and What Went Wrong

What Went Well

  • Q2 FY2026 profitability: Net income of ~$765k on the quarter, alongside 50%+ YoY growth in six-month revenue and gross profit; SG&A reduced >$1M YoY in the first six months .
  • Strategic wins and product expansion: Fortune 500 manufacturer selects RAD’s RIO Mini with North American expansion potential; commercial availability of RADCam Enterprise broadens addressable market through integrators/VMS compatibility .
  • Management commitment to debt reduction and operational discipline: Continued debt reduction actions and reiterated plan to reduce substantially all debt within 12–18 months; quote: “We are moving toward positive operational cash flow, we see a clear route to reducing debt…” — Steve Reinharz .

What Went Wrong

  • Guidance delay: Positive operational cash flow milestone moved from “during/shortly after Q3 FY2026” to April–May 2026, elongating the timeline and introducing execution risk .
  • Profitability quality mix: Q2 profitability primarily driven by one-time $4.37M gain on debt settlement (non-recurring), underscoring reliance on financing/settlement activities while core operations still show operating losses .
  • Liquidity and going concern: Q2 10-Q highlighted negative operating cash flow, significant current liabilities, and a going concern qualification; working capital deficit widened to $(6.41)M as of Aug 31, 2025 .

Financial Results

Recent quarters (oldest → newest). Q3 FY2026 is in-progress; no filed results yet.

MetricQ1 FY2026 (quarter ended May 31, 2025)Q2 FY2026 (quarter ended Aug 31, 2025)Q3 FY2026 (quarter ending Nov 30, 2025)
Revenue ($USD)$1,854,837 $1,888,749 N/A
Gross Profit ($USD)$1,233,501 $1,344,865 N/A
Gross Margin (%)66.5% (computed from cited values) 71.2% (computed from cited values) N/A
Net Income ($USD)N/A (company signaled Q2 profit; Q1 not provided in press release)$763,064 N/A
EPS (Basic, $)N/A$0.00 N/A
YoY Revenue Growth (%)+57% vs Q1 FY2025 +41% vs Q2 FY2025 N/A
YoY Gross Profit Growth (%)+80% vs Q1 FY2025 +34% vs Q2 FY2025 N/A

Segment/Revenue mix:

SegmentQ1 FY2026Q2 FY2026
Device Rental Activities ($USD)$1,627,286 $1,695,471
Direct Sales of Goods & Services ($USD)$227,551 $193,278

KPIs and operating metrics:

KPIQ1 FY2026Q2 FY2026 / 6M FY2026
Unit Deployments76 units N/A
Inventory Turnover (6M)N/A0.88x vs 0.40x prior year
Debt Reduction (6M)N/A~$7.3M reduction; est. ~$640k annual interest savings
Cash Used in Operations (6M)N/A$(5.40)M, improved by $1.03M YoY

Estimates vs actuals (S&P Global consensus): Not available. We attempted retrieval but were blocked by SPGI daily rate limits; therefore, estimates are unavailable at this time. We will update when accessible.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Positive Operational Cash FlowTiming“During or shortly after fiscal Q3 FY2026 (Sept–Nov 2025)” April or May 2026 Lowered/Delayed
Debt Reduction12–18 monthsNot previously quantified as “substantially all debt”Targeted reduction of substantially all debt in 12–18 months Introduced/Reaffirmed
Net Profitability (GAAP)Q2 FY2026Expected profitability primarily from debt settlement Achieved net income of ~$765k in Q2 FY2026 Achieved
Revenue MilestoneFY2026“Possibly break eight-figure revenue milestone” No change/Not reaffirmed in Q3 to-date disclosuresMaintained tone-only

Earnings Call Themes & Trends

No Q3 FY2026 earnings call transcript available as of Nov 20, 2025. Themes tracked using Q1–Q3 disclosures.

TopicPrevious Mentions (Q1 FY2026)Previous Mentions (Q2 FY2026)Current Period (Q3 FY2026 to-date)Trend
AI/Technology InitiativesEmphasis on ROAMEO and SARA; higher-value deployments driving rental revenue Continued product momentum; SARA platform; mix shift to rentals RADCam Enterprise launch; agentic AI “talk-down” with VMS integration Expanding product scope and integrations
Enterprise Wins / ChannelGrowing dealer network; shortening sales cycles Strong order pipeline, recurring revenue focus Fortune 500 manufacturer win; initial US/Canada deployments; potential ~200 units Strengthening enterprise traction
Supply ChainNot discussedNot discussedNot discussedNeutral/No disclosure
Regulatory/ComplianceSOC 2 Type 2 validation SOC 2 Type 2 reiterated SOC 2 Type 2 reiterated Sustained compliance credibility
R&D ExecutionIncreased software development; ROAMEO projects R&D up YoY; core development projects Agentic AI expansion via RADCam Enterprise Elevated investment; productization
Debt/Capital StructureDebt settlement agreements; expected Q2 gain ~$7.3M debt reduction in 6M; interest savings Target to reduce substantially all debt in 12–18 months Deleveraging trajectory

Management Commentary

  • “We’re looking to finish with positive operational cash flow and possibly break the eight-figure revenue milestone… disciplined execution across operations… aggressively reducing debt…” — Steve Reinharz (Q2 press release) .
  • “Reaching positive operational cash flow this spring will mark a significant milestone… we see a clear route to reducing debt… foundation that supports larger ambitions including a future uplist…” — Steve Reinharz (Nov 18) .
  • “Displacing an established competitor at this level validates the performance and reliability of our solutions… meaningful recurring revenue potential as this relationship scales…” — Steve Reinharz (Fortune 500 win) .
  • “RADCam Enterprise… expected to add meaningful recurring revenue opportunities… strengthen our position as a leader in AI-driven security solutions.” — Steve Reinharz (RADCam Enterprise launch) .

Q&A Highlights

  • No Q3 FY2026 earnings call transcript or Q&A published as of Nov 20, 2025 (we searched company documents and found none) [earnings-call-transcript list: 0 results].

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 FY2026 and subsequent quarter could not be retrieved due to rate-limit errors at the time of request; thus, estimates are unavailable. We will update when SPGI access is restored.
  • Without consensus benchmarks, we cannot assess beats/misses for Q3 FY2026 at this time.

Key Takeaways for Investors

  • Operational cash flow milestone delay to April–May 2026 is the central near-term narrative shift; monitor recurring revenue growth and SARA monetization to gauge credibility of the new timeline .
  • Underlying operating loss persists; Q2 profitability was non-recurring (debt gain). Track sequential gross margin, rental revenue mix, and OpEx control to assess path to sustainable profitability .
  • Enterprise traction is improving (Fortune 500 win, RIO deployments, RADCam Enterprise launch). This expands channel reach and recurring revenue potential — important for valuation and de-risking the cash flow target .
  • Liquidity remains tight with a going concern note; continued equity/loan financing and debt exchanges are part of the playbook. Watch dilution risk and financing terms while the company works down debt and pursues non-dilutive/minimally dilutive funding .
  • Execution metrics to track into Q3/Q4: device deployments, rental revenue growth, inventory turnover, and debt reduction progress (interest savings realization), plus any 8-Ks indicating material operational progress .
  • A potential uplist is aspirational and contingent on balance sheet strengthening and sustained performance; near-term focus should be on operational KPIs and cash generation rather than uplist timing .

Sources

  • Q2 FY2026 press release and 8-K: revenue/gross profit up ~50%, Q2 overall profitable, SG&A reduced >$1M; outlook for operational cash flow (prior guidance) .
  • Nov 18 8-K/press release: updated operational cash flow timeline (April/May 2026), debt reduction target, longer-term uplist ambitions .
  • Q1 FY2026 press release and 8-K: +57% revenue, +80% gross profit; 76 device deployments; expected Q2 gain and net profitability .
  • Q2 FY2026 10-Q: detailed financials (revenue, gross profit, net income, EPS), liquidity/going concern, working capital, segment revenue mix .
  • Q3 FY2026 operating updates: Fortune 500 manufacturer win, initial US/Canada deployments, potential ~200 RIO units ; RADCam Enterprise commercial launch .