Ai-Media Technologies Loses Investor Trust Even As Margins Improve

Fund managers split over whether abandoned targets and shifting metrics reflect a genuine operational problem or a communication failure

31 Mar 2026 · 7 min read

A management credibility crisis, not a demand problem, sent Ai-Media Technologies down 43 per cent in February 2026. Cyan Investment Management said the result was a jumble of outcomes: annual recurring revenue rose 80 per cent to $30 million, but overall revenue fell 6.4 per cent as the company wound back its human-dependent subtitling services, and most concerning to the market, the board withdrew its long-standing FY29 aspirational target of $150 million in revenue and $60 million in EBITDA. With growing medium-term uncertainty, the manager exited its small holding.

Tamim Funds Management described the update as one of the worst in its portfolio that month, with the company reporting an EBITDA loss, abandoning the FY29 targets entirely in favour of a new ARR metric, and blaming a delayed release of new encoders, now due in late April, for a sharp drop in encoder sales that serve as a lead indicator for future Lexi software revenue. The manager said the stock had fallen to a $46 million market cap against $17 million of net cash, implying an EV/ARR multiple of just 0.7 times, and while it believed the market had swung too far negative, it would wait for the August result before deciding whether to exit.

We believe management and the board has lost all credibility but the pendulum has swung too far negatively. Hence we will wait until the August result — if the company isn't showing signs of being on track on encoder sales, we will take the 'L' and exit the position.

— Tamim Funds Management, Monthly Report, February 2026

Trust broken even where the operational thesis held

Merewether Capital's own experience captured the same tension between operations and communication. The manager said the number of broadcast minutes captioned on Ai-Media's iCap network and processed through its proprietary LEXI automation continued to grow strongly, meaning the core operational investment thesis remained intact. But it described the business as having become nearly un-investable because management kept changing its operating strategy and reporting metrics, concluding the board had consistently presented information in the best possible light rather than honestly disclosing operational headwinds, a breach of trust that led the manager to exit its remaining small parcel after having earlier nearly tripled its position before round-tripping back to its original entry price.

We need complete trust in the management teams of our Fund holdings to entrust them with our capital and given AIM has lost that trust with me the decision to move on was not a difficult one.

— Merewether Capital, Monthly Report, February 2026

A very different rally just months earlier

The collapse stands in sharp contrast to the euphoria of September 2025, when Salter Brothers reported the stock rose 59.4 per cent as its top portfolio contributor following a constructive FY25 trading update showing 19 per cent growth in technology revenue and a reaffirmed plan to sunset lower-margin legacy services by 31 December 2025. Endeavor Asset Management initiated a position that same month, describing a company reshaping captioning and subtitling for broadcasters through an AI-led SaaS model built around LEXI, with margin expansion from around 40 per cent toward 80 per cent as software scales, and reported its shares closing 50 per cent above its entry price within the month.

A long-term holder still betting on the transition

Salter Brothers, a shareholder since 2022, remained constructive even after the February collapse. Its March 2026 update said gross margins had expanded from 52.1 per cent in FY22 to 69.5 per cent in the first half of FY26, forecast to exceed 75 per cent by FY27 as the mix continues shifting toward technology revenue, with the company maintaining a clean, debt-free balance sheet. The manager said Ai-Media now trades on a single-digit EV/EBITDA multiple and below one times revenue on its FY27 forecasts, despite improving margins and growth metrics trending toward the Rule of 40 profile typical of high-quality SaaS businesses.

What managers are watching next

With Oracle Advisory Group having exited entirely in the broader 2026 software sell-off tied to AI valuation uncertainty, the key test flagged by remaining holders like Tamim Funds Management is the company's August 2026 result, specifically whether encoder sales recover under the new hardware-as-a-service pricing model, a signal that would determine whether management can begin rebuilding the credibility that its abandoned FY29 targets and shifting reporting metrics have cost it.