MultiSensor AI Holdings, Inc. (SMAP)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue rose 132% year over year to $2.275M on expanding launch-customer deployments and early SaaS traction, while gross margin compressed to ~38% on higher materials and shipping costs .
• Non-GAAP ARR reached ~$2.5M (vs. ~$0.425M in Q1 2023), up >450%, reflecting scaling MSAI Cloud/Edge subscriptions and services; management positions ARR as a key KPI (definition: annualized software/services under ≥1-year contracts) .
• Balance sheet de-risking and float improvements: ~$7.05M of convertible notes/other debt converted to equity, earnout of up to 2.4M shares terminated, and 2.1M shares released from lock-up to improve liquidity; company targeting Nasdaq equity compliance (≥$2.5M stockholders’ equity) .
• Sequential context: Q2 2024 revenue was $2.125M (down ~7% vs. Q1), with continued focus on ARR growth and a new Inspections business and Denali partnership to broaden go-to-market; no numeric guidance provided .

What Went Well and What Went Wrong

What Went Well

• ARR inflection: ARR grew to ~$2.5M (+>450% YoY), underscoring progress in software-and-services-led model as a durable revenue base .
• Balance sheet actions: ~$7.05M of debt converted to equity; termination of a 2.4M-share earnout and lock-up waivers improved equity mix and free float, reducing overhang and future cash interest burden .
• Strategic expansion: Management launched MSAI Inspections post-quarter and highlighted progress with launch customers; later announced a channel partnership with Denali to ease enterprise adoption. “We continue to position the Company for sustained growth…” (David Gow) .

What Went Wrong

• Margin pressure: Gross margin fell to ~38% (from ~53% a year ago) on increased materials/supplies and shipping costs, alongside 456 devices shipped in a large implementation, pressuring unit economics in the near term .
• Operating losses widened: Net loss was $3.922M with EPS $(0.33) as financing-related charges (loss on financing transaction) and higher depreciation burden weighed on results despite SG&A improvement YoY .
• Controls and going concern: Management disclosed material weaknesses in internal controls and noted substantial doubt about going concern, with plans to raise additional capital and continue cost discipline (equity line with B. Riley established in April 2024) .

Financial Results

Income Statement Snapshot and EPS

Margins and Profitability

Geographic Mix

KPIs

Notes: ARR is defined as annualized current software and services revenue under contract for ≥1 year .

Guidance Changes

Earnings Call Themes & Trends

Note: We did not locate a Q1 2024 earnings call transcript in company filings or our document set; themes below reflect Q1 press release/10-Q and subsequent Q2 updates .

Management Commentary

• “Our strong first quarter results are an early indication of the future prospects for MultiSensor AI… Having a balance sheet that is nearly all equity positions the Company well for future growth.” – David Gow, Chair .
• “We continue to position the Company for sustained growth… highlighted by the launch of our Inspections business and our strategic channel partnership with Denali Advanced Integration.” – David Gow (Q2 release) .
• Focus areas reiterated: grow within blue-chip customers, scale commercial capabilities, add sensor modalities/services, strengthen implementation teams, and build ARR through Edge/Cloud offerings .

Q&A Highlights

• We did not find a Q1 2024 earnings call transcript in our filings/document set; the company’s Q1 communications were via press release and the 10-Q. No Q&A details available to report .

Estimates Context

• S&P Global (Capital IQ) consensus was unavailable for this ticker in our estimates tool mapping; therefore, we cannot provide SPGI-based EPS/revenue consensus comparisons for Q1 2024. We will update if SPGI coverage becomes available in our mapping [tool error referencing SPGI mapping].
• Given the absence of SPGI consensus, results are presented vs. prior year and sequentially, without a definitive Wall Street consensus comparison .

Key Takeaways for Investors

• Early ARR ramp suggests the software-and-services pivot is gaining traction; sustained ARR growth will be a key rerating driver as deployments scale in logistics, utilities, manufacturing, and O&G .
• Balance sheet simplification and equity-raising capacity increase strategic flexibility; deleveraging reduces future cash interest burden and supports Nasdaq compliance .
• Near-term gross margin headwinds (materials/shipping) and continued operating losses warrant caution; watch mix shift toward higher-margin software/services to lift profitability over time .
• Commercial catalysts: Inspections services launch and Denali partnership can accelerate enterprise adoption/upsell across sensor modalities and software subscriptions .
• Risk monitor: material weaknesses in internal control and going-concern language underscore the importance of execution and access to capital while scaling ARR .
• Sequential revenue cadence bears watching (Q2 revenue $2.125M vs. Q1 $2.275M); management still targets ARR momentum into H2 2024 .

Supporting Detail and Cross-Checks

• Revenue/earnings: Q1 2024 revenue $2.275M; net loss $3.922M; EPS $(0.33) .
• Gross margin: ~38% in Q1 2024 vs. ~53% Q1 2023; higher input/shipping costs cited; 456 devices shipped to a launch customer .
• ARR: ~$2.5M in Q1 2024 vs. ~$0.425M in Q1 2023; non-GAAP KPI (definition provided) .
• Balance sheet actions: debt/equity conversions and earnout/lock-up waivers to improve equity and float .
• Nasdaq equity compliance path and pro forma stockholders’ equity (~$3.6M as-adjusted) .
• Q2 2024 context: revenue $2.125M; strategic Inspections launch and Denali channel partnership reiterated .

Sources: Q1 2024 10-Q, Q1 and Q2 2024 earnings 8-Ks (press releases), March 7, 2024 earnout/lock-up 8-K. All citations above.