Airship AI Holdings, Inc. (BYTS)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 delivered a step-change in scale: net revenues of $10.58M, gross profit of $2.63M, and gross margin of 25%; operating loss improved to $1.40M despite higher public-company costs .
• Results were driven by federal contracts and hardware-heavy mix that compressed margins; “Other expense” swung to a non-cash loss of $30.56M from warrant/earnout fair value marks .
• Management reiterated 2024 objectives of triple-digit revenue growth and positive cash flow, underpinned by DHS and DOJ programs, validated $120M pipeline, and backlog of ~$3.4M to be delivered in Q2 .
• Stock reaction catalysts: sizeable DOJ/DHS wins, FedRAMP cloud deployments, and APAC expansion (Singapore) suggest durable demand; margin trajectory should improve as mix normalizes and supply chain/process efficiencies scale .

What Went Well and What Went Wrong

What Went Well

• Robust top-line growth: net revenues reached $10.58M, equal to 84.5% of FY 2023 revenue in a single quarter, evidencing step-change demand from U.S. federal agencies and international customers .
• Contract momentum: second DOJ sole-source award for Outpost AI ($2.35M) and continued DHS border operations delivery ($10.9M), plus Singapore public safety win, validating product-market fit across geographies .
• Management confidence: “ongoing contract momentum” supporting triple-digit FY growth; focus on converting mature pipeline into orders and executing FedRAMP cloud and edge AI deployments .

What Went Wrong

• Margin compression: gross margin fell to 25% due to higher third-party hardware mix in turnkey solutions, dampening near-term profitability leverage .
• Non-cash volatility: $30.56M “Other expense” driven by changes in warrant/earnout fair values; management cautions this will remain volatile with share price/inputs each quarter .
• Cash usage: operating cash flow of -$1.70M; cash balance ended the quarter at $1.73M, highlighting near-term liquidity focus while scaling operations .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

Note: Q4 2023 quarterly detail was not separately disclosed in available filings; FY 2023 was reported in aggregate .

Revenue Mix (Q1 2024 vs Q1 2023)

KPIs and Operating Metrics

Guidance Changes

No specific numeric guidance ranges (e.g., revenue, margins, OpEx, OI&E, tax rate) were disclosed in the Q1 2024 materials .

Earnings Call Themes & Trends

Note: No Q1 2024 earnings call transcript was available. Themes below reflect management commentary from press releases.

Management Commentary

• “The first quarter of 2024 saw ongoing contract momentum in support of our trajectory for triple-digit revenue growth for the full year… We were able to generate this significant top-line growth in tandem with an improvement in operating loss despite a significantly higher expense base…” — Paul Allen, President .
• “This project represents the second U.S. Government agency to deploy our Acropolis platform in a FedRAMP certified cloud environment… We then successfully developed a second $2.35 million sole-source contract award within the Department of Justice for Outpost AI edge appliances…” .
• “Acropolis was also chosen by an agency within the Singapore Government… Going forward, we see significant opportunity in Singapore and the larger Asia-Pacific region.” .
• “With the 2024 federal budget now approved, we expect to see heightened activity around these pilots and the rest of our pipeline… we believe we can continue to convert our mature pipeline to orders…” .
• FY23 context: Nasdaq listing improved customer transparency; rapid progression of pilots, FedRAMP cloud transition, and push of significant workflow to edge .

Q&A Highlights

• No Q1 2024 earnings call transcript was available; therefore, Q&A themes and clarifications cannot be assessed from a call record [Search yielded none].

Estimates Context

• S&P Global Wall Street consensus (EPS/revenue) for BYTS/Airship AI could not be retrieved due to missing CIQ mapping; thus, estimate comparisons are unavailable at this time. We will update when SPGI mapping is available.
• Notably, management highlighted that Q1 net revenues of $10.6M equaled 84.5% of FY 2023 revenue, suggesting potential upward estimate revisions if conversion of backlog/pipeline persists and margins normalize away from hardware-heavy mix .

Key Takeaways for Investors

• Scale inflection: Q1 revenue mix skewed to product hardware drove margin compression, but validates demand; expect margins to improve as supply chain/process efficiencies and software/services mix expand .
• Contract durability: DOJ sole-source awards and DHS border operations underpin visibility; APAC foothold (Singapore) adds diversification .
• Non-GAAP/non-cash dynamics: Significant volatility in “Other income/expense” from warrant/earnout fair value marks will persist; focus on operating metrics and cash generation for underlying trend .
• Liquidity watch: Operating cash flow negative and modest cash balance highlight importance of execution, warrant exercises, and working capital discipline near term .
• Narrative drivers: FedRAMP cloud deployments, edge AI autonomy (Outpost AI), and commercial ORC solutions are likely to be catalysts; conversion of ~$3.4M backlog in Q2 is a near-term milestone .
• Estimate pathway: With SPGI consensus unavailable, monitor sell-side updates post Q1 step-change; topline trajectory and margin recovery are the two biggest levers for revisions .
• Risk factors: Mix-driven margin compression, cash burn while scaling, and quarterly non-cash volatility from financial instruments warrant caution until operating cash flow inflects .

Citations: All facts and figures sourced from Airship AI’s Q1 2024 8-K and press release and FY 2023 8-K press release . Internet press release references corroborate the Q1 2024 data .