Unith reports breakout year for digital human platform

Digital human software developer Unith (ASX: UNT) has reported financial year 2023 as a “breakout” period where it reached key platform development and commercialisation milestones.

The company has made substantial progress with its digital human platform, with several major achievements including upgrades to digital facial features; the integration of GPT technology to enable open conversations; and the completion of AIKO (artificial intelligence knowledge operation) which enables self-service users to generate their own avatars.

It also entered into several commercial agreements, the most notable being with a Big-5 tech company where Unith’s digital humans will support the onboarding of new staff members in Europe.

With the first digital human already delivered and another two in development, Unith is now looking to expand to other departments within the Big-5 organisation.

Scale implementation

A January agreement with visual intelligence company NVISO Japan KK provided scale implementation for the digital human platform in various markets, with the first deployment through digital kiosks in Japan expected early in the new year.

Unith remains on track to launch the digital human self-service platform in December, allowing users to subscribe and generate customised avatars.

The platform will act as a gateway for the acquisition of new clients, with the aim of upgrading subscribers to commercial licences.

Revenue results

Unith delivered $4 million in revenue for the reporting period (compared to $5.3 million in 2022), impacted mainly by a challenging operating environment for its Mobile Subscription division which created headwinds around customer acquisition and billing in certain regions.

The challenges are being addressed with a strategy that kicked off in the second half of the year to transition customer acquisitions in-house rather than engaging third parties.

The company’s Digital Human division delivered $600,000 in revenue for the year, which is expected to grow significantly in financial year 2024 with recent contracts and new sales.

Range of industries

Chief executive officer Idan Schmorak said the digital human platform was generating revenue from a range of industries including technology, entertainment, healthcare, gaming and education.

“We are getting strong interest from the private and public sectors to capitalise on rising global interest in artificial intelligence and its ability to perform common business functions with greater reliability and accuracy than traditional labour, often at lower expenses,” he said.

“In advancing the digital human platform over the past 12 months, we have gained valuable insights on where businesses can best improve their own bottom line through the use of artificial intelligence and digital humans which work 24/7 and can engage in multiple conversations at once.”

He said the insights would continue to assist Unith’s commercial team in targeting new clients signed in the first two months of the 2024 financial year, namely Ukraine’s Alliance for Public Health, the AZBillions global e-lottery platform and Ensureing.

EBITDA improvement

Unith’s earnings before interest, taxation, depreciation and amortisation (EBITDA) profit of $200,000 for the reporting period was a 109% improvement on the previous year’s loss of $2.4 million as it continued to invest in the digital human platform as a scalable solution to generate greater margins as more clients are signed up.

Net loss after tax was $700,000, representing an improvement of 77% on the previous year’s loss of $3.2 million.

EBITDA and net loss included non-cash fair value gains on investments of $2.8 million; non-cash impairment expenses of $100,000; non-cash, share-based payment charges of $200,000; and restructuring costs of $200,000.

When adjusting only for these effects, Unith’s underlying EBITDA for the financial year was a loss of $2.1 million (compared to the previous year’s loss of $50,000).

This was attributed to a decline in revenue for the Mobile Subscription division; costs associated with the division’s restructure to bring customer acquisitions in-house; and increased costs for research and development of digital human technology.

Capital raising

In February, Unith raised $4.8 million through an institutional placement and share purchase plan.

The funds have allowed it to fast-track platform development and employ additional personnel on its sales and commercial teams.

At 30 June, Unith had $4.3 million cash on hand and $9.3 million in net assets.