Executive Summary / Key Takeaways

• Guardforce AI (NASDAQ:GFAI) is undergoing a profound transformation, strategically pivoting from its traditional secure logistics foundation to an AI-centric, tech platform-based business model, aiming for higher-margin growth.
• The company achieved a significant financial turnaround in 2024, recording its first operating profit since its IPO, narrowing its net loss by over 80% to $5.9 million, and reaching a historical high gross profit margin of 17%, driven by operational efficiencies and a shift towards higher-margin retail-focused services.
• GFAI's core technological differentiator lies in its AI agent strategy, exemplified by the launch of DVGO (DeepVoyage Go), an AI-powered travel planning agent, and the enhancement of its Intelligent Cloud Platform (ICP) to support a "Robots-As-A-Service" (RaaS) model, which is expected to drive future high-margin, recurring revenue streams.
• With a strong cash position of approximately $25.0 million as of June 2025, Guardforce AI is well-capitalized to accelerate its AI solution strategies and pursue strategic acquisitions that complement its core business and AI platform expansion.
• The company's competitive edge stems from its localized expertise, established client relationships in Asia Pacific, and a "robotics agnostic" RaaS model that prioritizes service and data intelligence over hardware sales, positioning it uniquely against global manufacturers and traditional security firms.

Guardforce AI's Strategic Evolution and Market Landscape

Guardforce AI Co., Limited, founded in Singapore in 1982, has built a four-decade legacy as a provider of secure logistics services across the Asia Pacific region, establishing a particularly strong presence in Thailand. This foundational business, encompassing cash-in-transit, ATM management, and cash processing, has historically been the primary driver of revenue and cash flow, accounting for over 80% of total income and serving more than 25,000 retail clients. The company is now undergoing a strategic and transformative pivot, shifting its focus from a traditional service-based model to an AI-centric, tech platform-based business.

The broader industry landscape is characterized by a growing need for automation, accelerated by global events like the COVID-19 pandemic, increased funding for robotics and AI research, and supportive government policies. These trends are creating significant opportunities for companies like Guardforce AI. For instance, the service robotics market is projected to reach $57 billion by 2029, growing at a CAGR of 16.6%, with the Asia Pacific region expected to outpace this growth at 23.7%. Similarly, the artificial intelligence market is anticipated to grow at a CAGR of 38% to $1.59 trillion by 2030, with Asia Pacific leading this expansion.

In this evolving market, Guardforce AI faces competition from global secure logistics giants such as Brink's Company (BCO), Loomis AB (LOOMIS), and Securitas AB (TICKER:SECU B), which possess extensive international networks and diversified service portfolios. These larger players often benefit from economies of scale and robust technological integration. However, Guardforce AI differentiates itself through its deep localized expertise in markets like Thailand, where it holds a leadership position in outsourced cash center operations. Its "Robots-As-A-Service" (RaaS) model is also a key differentiator; unlike many robotics manufacturers focused on one-off sales, Guardforce AI is "robotics agnostic," prioritizing the leasing of robots as a monthly service to generate recurring revenue streams and collect valuable data. This approach, similar to a manned guarding service but with robots, focuses on providing a comprehensive solution that includes technology, maintenance, and problem-solving, rather than just selling hardware. Indirect competition also arises from the proliferation of digital payment platforms and cybersecurity firms, which could reduce the demand for physical cash handling.

The AI and Robotics Core: Technological Differentiators and Innovation

Guardforce AI's strategic pivot is underpinned by its commitment to technological differentiation and innovation, particularly in AI and robotics. The company's core technology revolves around its proprietary multi-agent platform, which integrates AI, robotics, and smart solutions to power sector-specific applications. A central component of this is the GFAI AI Intelligent Cloud Platform, which has been upgraded into an AI-driven system capable of supporting agent-based AI, focusing on deep user intent modeling, simulated coordination among specialized AI agents, transparent feedback loops, and a scalable, multi-lingual architecture. This platform is crucial for remotely managing, monitoring, and scaling value-added services from deployed robots.

A significant milestone in this technological roadmap was the 2024 launch of DVGO (DeepVoyage Go), Guardforce AI's first AI-powered travel planning agent. DVGO is designed to act as a user-centric agent, understanding a traveler's intent and purpose to build personalized paths, rather than simply pushing products like traditional travel platforms. It employs multi-objective optimization and reinforcement learning models to solve complex travel planning challenges, adapting to user needs such as budgets, timing, and travel style. This technology aims to reduce travel planning time from days to hours and deliver highly personalized itineraries. DVGO serves as a proof point for Guardforce AI's broader AI platform, with plans for future expansion into SaaS and B2B/B2C use cases across retail, education, and other consumer-facing industries. Management believes this shift to a tech platform-based model will significantly enhance the company's valuation and position it for sustainable, long-term growth with higher margins.

Guardforce AI's commitment to innovation is further evidenced by its substantial investment in research and development. In 2024, the company increased its R&D spend by approximately 2.5 times to $591,000, focusing on enhancing its AI and robotics solutions platform, ICT 3.0, as the core for next-generation AI solutions. An "orange team" has been established to support the development of AI agents, reflecting the company's belief that AI should empower people by enhancing productivity and helping users make decisions rooted in personal relevance. The company's intellectual property strategy involves both owning and licensing technology, deploying core systems for advanced agent coordination and decision optimization, while also utilizing selected AI foundation models and open-source components under proper agreements. This multi-layered approach, which includes treating critical technologies as internal trade secrets and marginalizing systems to limit exposure risks, is designed to safeguard its technological edge and ensure long-term value creation.

Financial Performance: A Transformative Year and Path to Profitability

The year 2024 marked a "transformatic year" for Guardforce AI, characterized by operational consolidation, an improved revenue mix, and significant strides in AI innovation. The company's core business achieved its first operating profit since its IPO, a notable milestone following the challenges of the pandemic. Total revenue for 2024 increased by approximately 0.2% to $36.3 million compared to 2023. The Secure Logistics business, while traditionally lower-margin, saw its revenue increase by 1.7% to $32.4 million, primarily driven by retail-focused service lines in Thailand. Specifically, Guardforce Digital Machine (GDM) products experienced a remarkable year-over-year growth of 39.5%, adding $1.1 million in revenue, fueled by strong demand from chain retailers. The cash-in-transit non-dedicated vehicle (CIP NANDV) business also grew by 3.0%, or $351,000.

Company-wide efforts in expense control yielded positive results, with the cost of sales decreasing by approximately $799,000 in 2024. This contributed to a 16.1% increase in gross profits, which reached $6.3 million year-over-year. The gross profit margin achieved a historical high of 17% in 2024, a result of improvements across all business segments and a successful manpower streamlining project that substantially reduced direct labor costs. Operating expenses also saw a significant year-over-year decrease of 20.7%, or $2.6 million, largely due to reductions in selling, distribution, and administrative expenses. The transition towards an AI-centric business model led to a decline in depreciation and amortization expenses due to reduced use of legacy robotics assets. These improvements collectively contributed to a substantial narrowing of the net loss from continuing operations, which decreased by 80.1% to $5.9 million, marking the lowest net loss since 2022. Adjusted EBITDA also improved significantly, from negative $1.8 million in 2023 to negative $0.7 million in 2024.

Looking into the first half of 2025, Guardforce AI reported a 3.6% increase in revenue, reaching $18.2 million. The GDM segment continued its strong performance, growing by 18.1% to $2.2 million, reflecting increasing adoption among banking and retail clients in Thailand. Despite this revenue growth, the company posted a net loss from continuing operations of $2.2 million, which widened from a $1.9 million loss in the first half of 2024. This was attributed to sustained investment in R&D and a decline in gross profit, which decreased to $3.0 million from $3.2 million year-over-year, with the gross profit margin contracting to 16.2% from 18.4%. These figures underscore the ongoing investment phase in AI development, which, while impacting short-term profitability, is crucial for the company's long-term strategic shift.

Liquidity and Capital Allocation: Fueling the AI Ambition

Guardforce AI maintains a robust financial position to fund its ambitious AI and robotics initiatives. The company reported a strong balance sheet with approximately $23.4 million in cash, cash equivalents, and restricted cash as of December 31, 2024. This figure further increased to $25.0 million by June 2025. Management considers this capital "well-sufficient to accelerate our AI solution strategies."

Managing cash flow remains a top priority for Guardforce AI. In 2024, the company made meaningful progress in reducing its cash burn by steadily increasing revenue, achieving a healthier gross margin, and tightening its cost structure, all contributing to significantly narrowing its net loss. Historically, the company bolstered its cash position through a NASDAQ IPO in 2021, which generated approximately $15 million in gross proceeds, followed by a private placement that raised an additional $10.3 million. The majority of Guardforce AI's capital expenditures are now strategically focused on acquisitions and robotic solutions, rather than significant increases in maintenance capital expenditures for its legacy cash management business. This disciplined approach to capital allocation ensures that resources are directed towards high-growth, high-margin opportunities central to its AI transformation.

Strategic Initiatives and Outlook: Scaling the AI Platform

Guardforce AI's vision for 2025 is clear: to scale its newly built platforms, expand its presence in retail and travel sectors, intensify AI research and development, and extend its smart solutions globally. The company's focus for the next 12 to 24 months will be on expanding its AI agent platform, starting with DVGO, and progressively moving into new verticals, including travel, retail, and education.

Management anticipates that DVGO will initially contribute a "small but growing portion of overall revenue," helping to diversify income from traditional services to more recurring, AI-powered revenue streams. Over time, DVGO is expected to become a major contributor. While initial margins for DVGO may be lower due to upfront AI development and customer acquisition costs, the high-margin, software-driven nature of the platform is projected to "significantly boost our profit margin" as it scales, offering higher efficiency and lower incremental costs.

Strategic acquisitions remain a key component of Guardforce AI's growth strategy. The company targets entities with existing sales distribution networks and customer bases to facilitate rapid market entry, particularly in the traditional security space for business transformation. This approach was evident in its 2022 entry into China through acquisitions and its establishment of subsidiaries in Dubai and Australia, focusing on RaaS rollout initiatives. Dubai is seen as a strategic opportunity aligned with the UAE government's Smart City initiatives, while Australia offers growth potential due to high labor costs driving automation adoption.

In its core secure logistics business, Guardforce AI continues to leverage its established relationships. In June 2025, its Thai subsidiary secured a three-year contract renewal with Government Savings Bank, extending a decade-long partnership. The company also launched smart solutions and AI applications in Thailand in July 2025, rebranding its subsidiary and introducing updated Smart Cash Solutions and Smart Retail Solutions. Leadership stability is further reinforced by the formalization of Ms. Lei Wang's (Olivia Wang) role as Chief Executive Officer through a consulting agreement on September 15, 2025, with her engagement renewed as of September 1, 2025. Her responsibilities include overseeing day-to-day operations and strategy, leading M&A and investments, and setting performance targets, providing a clear strategic direction for the company's transformative journey.

Risks and Challenges

While Guardforce AI's strategic pivot presents significant opportunities, it is not without risks and challenges. The transition to an AI-centric model involves substantial upfront investment in research and development, as evidenced by the increased R&D spend and the initial lower margins for new AI offerings like DVGO. This investment can impact short-term profitability and cash flow, as seen in the widened net loss in the first half of 2025.

The competitive landscape is intense, with established global players in secure logistics and emerging innovators in AI and robotics. Guardforce AI's regional focus, while a strength in localized markets, could limit its overall scale and expose it to regional economic fluctuations more acutely than globally diversified competitors. Furthermore, the company's reliance on its existing customer base for introducing new AI solutions, while a strategic advantage, also presents a concentration risk. The rapid evolution of AI technology and the competitive nature of the market necessitate continuous innovation and adaptation to maintain a technological edge.

Conclusion

Guardforce AI is at a pivotal juncture, actively transforming from a traditional secure logistics provider into an AI-driven technology platform. The company's strategic pivot, centered on its proprietary AI agent platform and the Robots-As-A-Service model, represents a clear path towards higher-margin, recurring revenue streams and enhanced valuation. The significant financial improvements in 2024, including its first operating profit since IPO and a substantially narrowed net loss, validate the initial success of this strategic shift, demonstrating effective cost management and a growing demand for its tech-enabled services in the retail sector.

With a strong cash position and a clear roadmap for scaling its AI solutions globally, Guardforce AI is well-positioned to capitalize on the burgeoning automation and AI markets. While the company faces inherent risks associated with technological investment and intense competition, its localized expertise, established client relationships, and differentiated RaaS model provide a compelling foundation. Investors should closely monitor the continued adoption and scaling of its AI offerings, particularly DVGO, and the successful integration of its strategic acquisitions, as these will be critical indicators of Guardforce AI's ability to unlock its long-term growth potential as a leader in the intelligent security and automation space.