Brain Model Partnerships Will Transform Commerce Infrastructure And Reshape Long Term Earnings Potential

Catalysts

About Rezolve AI

Rezolve AI provides AI powered, commerce specific software that helps enterprise retailers improve product discovery, customer engagement and checkout across digital and physical channels.

What are the underlying business or industry changes driving this perspective?

• Rezolve AI is targeting a very large global retail and e commerce opportunity. Its Brain Suite is positioned as infrastructure for agent based commerce, which could support a larger contracted ARR base and higher reported revenue over time.
• The company’s proprietary brainpowa model is built specifically for commerce use cases and is reported to deliver effectively zero hallucinations while competing with leading public models. This positioning may support pricing power, ARR growth and resilient gross margins.
• Deep relationships with Microsoft, Google and Tether, including co sell programs and warm lead commitments, create a distribution and payments channel that could accelerate enterprise customer additions, raise ARR and improve operating leverage as fixed costs are spread over a larger base.
• Rezolve AI is pursuing a roll up of older search vendors like GroupBy and ViSenze, using acquisitions to add talent, customers and cross sell potential. This strategy can increase ARR per customer and support margin progression as legacy offerings are migrated to higher margin SaaS.
• The launch of professional services, visual search and upcoming digital asset payment capabilities tied to Brain Checkout allows Rezolve AI to participate in more parts of the commerce stack. This can support higher average contract values, more diversified revenue and potentially stronger net earnings over time.

Assumptions

This narrative explores a more optimistic perspective on Rezolve AI compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Rezolve AI's revenue will grow by 368.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -4102.3% today to 9.4% in 3 years time.
• The bullish analysts expect earnings to reach $51.4 million (and earnings per share of $0.16) by about January 2029, up from $-217.5 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $-561.1 thousand.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 117.9x on those 2029 earnings, up from -5.1x today. This future PE is greater than the current PE for the US Software industry at 32.6x.
• The bullish analysts expect the number of shares outstanding to grow by 6.32% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.06%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Rezolve AI is still early in commercialisation, with first half 2025 revenue at US$6.3 million and ARR targets of US$150 million for 2025 and US$500 million for 2026. If large enterprise pilots do not convert into long term deployments or renewals at the pace implied, ARR growth and reported revenue could fall short of expectations.
• The business model currently relies on very high gross margins of 95.8% from cloud software. Management expects professional services to account for 15% to 30% of ARR in 2025 with margins of 18% to 45%, so a larger mix of lower margin services over time could structurally reduce gross margin and delay any path to positive earnings.
• Management is guiding to a rapid scale up in customers and ARR using acquisitions of older search vendors and a small base of about 22 salespeople today, along with significant planned hiring. If integration of acquired companies or the ramp up of a larger salesforce is slower or more expensive than planned, operating expenses could rise faster than revenue and keep net margins and cash flow under pressure.
• The company is positioning its proprietary brainpowa model and Brain Suite as core infrastructure for agent based commerce in a very large e commerce and retail market. If larger technology platforms or in house retailer solutions offer competing capabilities that are viewed as equivalent, Rezolve AI could face pricing pressure or lower win rates, which would weigh on ARR per customer and long term earnings potential.
• Rezolve AI is building out crypto enabled Brain Checkout with Tether and plans further M&A tied to payments and blockchain. If adoption of digital asset payments by enterprises or consumers is slower than management expects, or if regulation on stablecoins tightens, the payments roadmap could contribute less revenue than planned and the associated investments could drag on profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Rezolve AI is $15.0, which represents up to two standard deviations above the consensus price target of $10.0. This valuation is based on what can be assumed as the expectations of Rezolve AI's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $15.0, and the most bearish reporting a price target of just $7.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $543.9 million, earnings will come to $51.4 million, and it would be trading on a PE ratio of 117.9x, assuming you use a discount rate of 9.1%.
  
• Given the current share price of $3.68, the analyst price target of $15.0 is 75.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.