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Successful Monetization of AI-related Services is a hot topic.
XMAX and EVC are both generating revenues from AI-based services
Admittedly, I am always a bit dubious when companies chase the next big thing, in this case AI, violently swerving from their lane of traditional businesses.
But, as they say, the proof is in the pudding. Both companies profiled are generating material revenue from these AI-related product lines and are therefore worth monitoring.
XMax Inc. (XMAX - Free Report) traditionally had been a seller of residential and commercial furniture, utilizing third-party contract manufacturing. Marble slabs and sofas were their primary products.
Image Source: Zacks Investment Research
But XMax Inc. (XMAX - Free Report) has recently ventured off into the AI MaaS (Model-as-a-Service) business buoyed by various capital raises in 2026 totaling about $46 m.
The services are wide in breadth form AI API’s, AI agents, AI coding assistants, workflow automation, and much more. So, this is a picks n shovels play on AI. Customers are companies looking to create proprietary AI applications and embed them into their company workflows.
Importantly, revenue is generated via compute usage-all hardware costs associated with GPU usage like electricity, power, and time. This compares to a token system which measures the units of text that AI processes.
For the last quarter, with only one month of operation, the AI business generated $1.1 m of revenue at nearly break-even Gross Profit. Operating expenses were $.5 m resulting in a net operating loss of $.6 m.
The bet here is that service revenue continues ramping and the cost of compute continues to come down. Of note, sales in the furniture business were down but the business remains profitable.
Given picks n shovels plays involving AI infrastructure have generally outperformed, it is worth monitoring the performance of this business segment especially given the dry powder from recent raises which buys some time. Zacks currently has a Neutral rating on the stock.
In the case of Entravision Communications Corp. (EVC - Free Report) , the swerve out of their traditional business lane is not as dramatic as XMAX.
Image Source: Zacks Investment Research
Entravision Communications Corp. (EVC - Free Report) operates two segment: Media and ATS (Advertising Technology and Services). The media segment owns and operates tv and radio stations primarily serving the Hispanic community.
The ATS segment mainly serves mobile app developers looking to advertise to monetize the apps, so Entravision Communication Corp. (EVC - Free Report) provides an AI-powered demand-side platform for running ads in addition to a digital marketing agency.
While the media business has understandably been under some strain from the volatility of ad spending, its cost actions have been helping to improve the operating loss.
ATS, on the other hand, emerged as a potential juggernaut this past quarter. In Q2 ATS revenue surged 230% YOY to $182.8 m while also demonstrating leverage as operating income rose to $40 m vs. $5.2 m in the prior year quarter.
ATS revenue now represents 80% of consolidated revenue in the past quarter. A large Asian customer helped to enable the step-function growth in the quarter and now represents 40% of consolidated revenue.
The question is, are there other potential significant customer wins in the offing to sustain the meteoric revenue growth? This is partly why we remain on the sidelines at a Neutral, looking for more evidence of sales momentum.
Regardless, these AI related business segments are worth monitoring as quant screens typically judge consolidated results and miss these growing sub-plots beneath the surface.
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Image: Bigstock
Sofas to AI Services? 2 Watchlist Stocks
Key Takeaways
Admittedly, I am always a bit dubious when companies chase the next big thing, in this case AI, violently swerving from their lane of traditional businesses.
But, as they say, the proof is in the pudding. Both companies profiled are generating material revenue from these AI-related product lines and are therefore worth monitoring.
XMax Inc. (XMAX - Free Report) traditionally had been a seller of residential and commercial furniture, utilizing third-party contract manufacturing. Marble slabs and sofas were their primary products.
Image Source: Zacks Investment Research
But XMax Inc. (XMAX - Free Report) has recently ventured off into the AI MaaS (Model-as-a-Service) business buoyed by various capital raises in 2026 totaling about $46 m.
The services are wide in breadth form AI API’s, AI agents, AI coding assistants, workflow automation, and much more. So, this is a picks n shovels play on AI. Customers are companies looking to create proprietary AI applications and embed them into their company workflows.
Importantly, revenue is generated via compute usage-all hardware costs associated with GPU usage like electricity, power, and time. This compares to a token system which measures the units of text that AI processes.
For the last quarter, with only one month of operation, the AI business generated $1.1 m of revenue at nearly break-even Gross Profit. Operating expenses were $.5 m resulting in a net operating loss of $.6 m.
The bet here is that service revenue continues ramping and the cost of compute continues to come down. Of note, sales in the furniture business were down but the business remains profitable.
Given picks n shovels plays involving AI infrastructure have generally outperformed, it is worth monitoring the performance of this business segment especially given the dry powder from recent raises which buys some time. Zacks currently has a Neutral rating on the stock.
In the case of Entravision Communications Corp. (EVC - Free Report) , the swerve out of their traditional business lane is not as dramatic as XMAX.
Image Source: Zacks Investment Research
Entravision Communications Corp. (EVC - Free Report) operates two segment: Media and ATS (Advertising Technology and Services). The media segment owns and operates tv and radio stations primarily serving the Hispanic community.
The ATS segment mainly serves mobile app developers looking to advertise to monetize the apps, so Entravision Communication Corp. (EVC - Free Report) provides an AI-powered demand-side platform for running ads in addition to a digital marketing agency.
While the media business has understandably been under some strain from the volatility of ad spending, its cost actions have been helping to improve the operating loss.
ATS, on the other hand, emerged as a potential juggernaut this past quarter. In Q2 ATS revenue surged 230% YOY to $182.8 m while also demonstrating leverage as operating income rose to $40 m vs. $5.2 m in the prior year quarter.
ATS revenue now represents 80% of consolidated revenue in the past quarter. A large Asian customer helped to enable the step-function growth in the quarter and now represents 40% of consolidated revenue.
The question is, are there other potential significant customer wins in the offing to sustain the meteoric revenue growth? This is partly why we remain on the sidelines at a Neutral, looking for more evidence of sales momentum.
Regardless, these AI related business segments are worth monitoring as quant screens typically judge consolidated results and miss these growing sub-plots beneath the surface.