Datasea (DTSS) AI Stock Analysis

• Market Cap: $9.54M
• Dividend Yield: N/A
• Average Volume (3M): 47.00K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.62
• Revenue Growth: 68.56%
• EPS Growth: 89.48%
• Country: US
• Employees: 36
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): -0.06
• Shares Outstanding: 10,447,153
• 10 Day Avg. Volume: 75,768
• 30 Day Avg. Volume: 47,002
• PEG Ratio: 0.03
• Price to Book (P/B): 4.34
• Price to Sales (P/S): 0.18
• P/FCF Ratio: -1.99
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: 0.19
• Enterprise Value/Gross Profit: 2.60
• Enterprise Value/Ebitda: -14.41
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 42 Neutral
• Price Target: $0.92 ▲(11.33% Upside)
• Action: Reiterated Date: 02/19/26
• Date: Action: Reiterated 02/19/26

The score is held down primarily by weak profitability (negative margins, low gross margin) and recent revenue contraction, alongside bearish technical positioning (price below key moving averages and negative MACD). These risks are partially offset by improved recent cash generation (positive TTM operating cash flow and strong TTM free cash flow) and currently manageable leverage in the latest snapshot.

Positive Factors

Improving Cash Generation

Trailing-twelve-month operating cash flow has turned positive and FCF is strongly positive, shifting the company from prior years of negative cash flow. Durable FCF would fund R&D, reduce refinancing needs and support gradual deleveraging if sustained across multiple quarters.

Manageable Near-Term Leverage

Latest TTM leverage is relatively low with positive equity, giving the company financial flexibility versus recent negative-equity history. This manageable capital structure reduces acute solvency risk and supports investment or partnerships while operational performance improves.

Foundational R&D Breakthrough

Management disclosed a systems-level R&D milestone in ultrasonic nanoscale precision control aimed at semiconductor process applications. If engineering validation and commercialization follow, this can create durable IP, expand TAM and differentiate offerings over a multi-quarter to multi-year horizon.

Negative Factors

Low Margins and Revenue Contraction

Very low gross margins combined with negative net margin and recent revenue decline constrain scalable profitability. Structural margin weakness means the company must meaningfully improve pricing, mix or cost structure to generate durable profits as revenue growth falters.

Historical Balance-Sheet Volatility

Past episodes of negative equity and materially higher annual leverage indicate reliance on external financing and volatile capitalization. This history raises the risk that capital needs may reappear and could constrain strategic options until margins and cash flow stabilize.

Inconsistent Cash Flow Quality

Although recent TTM FCF is positive, prior annual cash flows were deeply negative and growth has been volatile. Inconsistent cash generation undermines reliable funding for R&D and commercialization, making multi-quarter execution and scaling riskier absent sustained improvement.

Datasea Business Overview & Revenue Model

Company Description

Datasea Inc., through its subsidiaries, provides smart security solutions in the People's Republic of China. It develops big data security and smart 3D security platforms, safe campus security systems, scenic area security systems, and public community security systems, as well as epidemic system. The company offers its smart security solutions primarily to schools, tourist or scenic attractions, and public communities. It also provides 5G messaging and smart payment solutions. The company was formerly known as Rose Rock, Inc. and changed its name to Datasea Inc. in October 2015. Datasea Inc. was incorporated in 2014 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes Money

Datasea generates revenue through multiple streams, primarily by offering subscription-based data analytics services and cloud solutions to businesses seeking to leverage big data for operational efficiency. Additionally, the company earns income through consulting services that help clients implement AI-driven strategies. Significant partnerships with technology firms and enterprises enhance its market presence and provide avenues for collaborative projects, further contributing to its revenue. The company may also explore licensing its proprietary technologies, which could serve as an additional revenue source.

Datasea Financial Statement Overview

Summary

Mixed but improving fundamentals: losses have narrowed and TTM operating cash flow is positive (~$0.75M) with strong TTM free cash flow (~$4.62M). Offsetting this, revenue declined ~11.6% vs the prior period, gross margin remains very low (~7.4%), and profitability is still negative (TTM net margin ~-4.8%) with a history of balance-sheet/cash-flow volatility (including prior negative equity).

Income Statement

DTSS shows a clear improvement in scale versus earlier years, with TTM (Trailing-Twelve-Months) revenue of ~$56.9M, but momentum has weakened as revenue declined ~11.6% versus the prior period. Profitability remains pressured: gross margin is low (~7.4%) and the company is still loss-making (TTM net margin ~-4.8%), though losses are far smaller than in prior annual periods when margins were deeply negative. Overall, the direction is better than the historical base, but the combination of declining revenue and continued operating losses keeps the score subdued.

Balance Sheet

Leverage looks manageable in the latest snapshot, with low debt relative to equity in TTM (Trailing-Twelve-Months) data (debt-to-equity ~0.24) and positive equity (~$0.55M). That said, balance sheet stability has been volatile historically: equity was negative in 2023 and 2024, and annual 2025 still shows much higher leverage (debt-to-equity ~0.90). Returns to shareholders are currently negative given ongoing losses (TTM return on equity is meaningfully negative), so the balance sheet is improved but not yet consistently strong.

Cash Flow

Cash generation has turned a corner most recently: TTM (Trailing-Twelve-Months) operating cash flow is positive (~$0.75M) and free cash flow is strongly positive (~$4.62M), a notable shift from multiple years of negative operating and free cash flow. However, cash flow quality and consistency are still a concern—annual 2025 operating cash flow and free cash flow were deeply negative, and the reported free cash flow growth is highly volatile (large decline off a prior spike). The current run-rate is encouraging, but durability remains unproven.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	56.89M	71.62M	23.98M	3.64M	17.08M	175.14K
Gross Profit	4.19M	2.44M	474.11K	135.48K	955.67K	94.00K
EBITDA	-755.90K	-3.94M	-11.63M	-7.48M	-6.66M	-4.66M
Net Income	-2.73M	-5.08M	-11.38M	-9.48M	-6.52M	-4.65M
Balance Sheet
Total Assets	8.64M	6.74M	3.29M	2.75M	3.76M	3.90M
Cash, Cash Equivalents and Short-Term Investments	608.51K	620.81K	181.26K	19.73K	164.22K	49.68K
Total Debt	4.00M	2.67M	1.22M	2.15M	571.37K	2.78M
Total Liabilities	5.17M	3.79M	3.60M	6.33M	2.16M	3.82M
Stockholders Equity	3.48M	2.95M	-236.75K	-3.52M	2.45M	319.65K
Cash Flow
Free Cash Flow	4.62M	-6.46M	-6.57M	-3.22M	-6.24M	-4.12M
Operating Cash Flow	753.89K	-2.37M	-6.40M	-3.14M	-5.14M	-3.95M
Investing Cash Flow	-2.96M	-4.09M	-167.96K	-113.13K	-1.13M	-168.69K
Financing Cash Flow	2.62M	6.95M	6.84M	3.11M	6.38M	2.45M

Datasea Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.83
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DTSS, the sentiment is Negative. The current price of 0.83 is below the 20-day moving average (MA) of 0.98, below the 50-day MA of 0.95, and below the 200-day MA of 1.69, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 45.10 is Neutral, neither overbought nor oversold. The STOCH value of 42.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DTSS.

Datasea Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BLIN	53 Neutral	$11.22M	-4.36	-25.73%	―	0.16%	-36.86%
BNAI	50 Neutral	$208.16M	-6.14	-218.30%	―	-24.72%	53.60%
CETX	46 Neutral	$10.68M	0.05	-145.07%	―	16.50%	―
RVYL	43 Neutral	$7.45M	-0.11	-993.23%	―	-44.25%	82.71%
DTSS	42 Neutral	$9.54M	-2.62	-93.31%	―	68.56%	89.48%
MSAI	42 Neutral	$15.46M	-0.74	-103.97%	―	―	―