The first seven months of AirIQ’s fiscal year received a lot of fanfare sending the stock up 86% but they have been in retreat mode since hitting their 52 week high back in February, giving back 30%.
My previous review came just after hitting that 66 cent high and I rewarded them with a handsome 3.75 star review. At the time I said if you were holding cheaper shares it was probably worth the hold but due to the lack of liquidity in the stock, there appeared to be some significant risk taking a position above 60 cents.
In my more recent July What’s Wolf Watching article, I put AirIQ in a conditional Buy Zone between 47 and 49 cents. It never did get there leading into earnings - but it is now. So are this results still worthy enough of considering taking a position here? Let’s find out.
Balance Sheet:
A very solid current ratio but overall consist of some pretty minuscule numbers. Their balance sheet consists of $1.6M in cash, $600k in receivables, $410k worth of inventory and $165k in prepaids overtop of $1.1M in one year financial commitments within A/P and accrued liabilities. AirIQ is not only debt free, but long term liability free as well. Their cash and receivables also cover their liabilities by a factor of more than two, so liquidity is strong as well.
Cash Flow:
AirIQ was operationally cash flow positive for the year, generating $1.29M, an increase of 30% over last year.
Relative to their size, they invested heavily with $2.7M of cash outflow within investing activities - $850k acquiring customer contracts, $460k investing in software and $1.36M in rental units.
They bought back $200k in shares and received $78k from options during the year as well. Due to the investments their cash position actually depleted by about 50% during the year despite the strong operational cash flow performance.
Share Capital:
29.5M shares outstanding with virtually no dilution over the past years. Share buybacks have offset stock option exercises for the most part.
1.75M options outstanding. All ITM but none expire in the next two years
611k repurchased in 2025 and 1.12M over the past two
41% insider ownership but no activity in the open market thus far in 2026
Income Statement:
Revenue increased to $6.5M during their 2025 fiscal year, up 17%. Gross margin was slightly off by 140 basis points but still a very strong 59.8%. Gross profit dollars therefore rose by 14.5%.
The company converted well within their operational spending which grew by 6.7%, less than half of the growth rate of their sales and GP.
They look excellent on the income before other expenses line, $974k vs $667k, up by 46%. Unfortunately, there were a few hiccups beneath that. $214k in additional tax re-assessments, a $114k bogey in foreign exchange to last year and less interest income on their cash position, all contributed to a 50% reduction in their net income compared to last year - $104k vs $203k.
On the quarter, revenues were up by 40% with some additional slippage in margin and operating profit increased by 44%. Unfortunately, the tax re-assessment and other items hit hard in Q4 resulting in a net loss of $150k.
Summary:
In my last review, I referred to AirIQ as small potatoes and when you have one little item like their tax re-assessment, that can put a damper on a good year and that appears to be the case here. After their third quarter, the company’s YTD net income was 55% greater than last year. At year end, they achieved half.
That 32 P/E ratio I discussed last quarter just turned into 144 as a result. They do look more attractive on an EV/EBITDA ratio at 8.8 and trade at 11.3x cash flow.
One of the most attractive parts about the company is their recurring revenue model which makes up 91% of their total revenue. That sets them up for a couple more solid revenue quarters to begin their 2026 year.
One of the lesser attractive things about AirIQ is the stocks liquidity. It can go days without trading a single share. Their largest volume day was 76k shares traded in the past year, and only traded 143k shares in the past thirty days.
I’m not anti illiquid stocks, but they have to impress me a little bit more to take that leap due to the increasing risk.
I continue to contend that AirIQ is a solidly run business, but they don’t quite meet the risk/reward criteria for me. Slight downgrade to 3.5 stars due to the valuation metrics getting slightly more expensive here.
Disclaimer:
My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.
Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.