Ava Risk Group Faces Pressure to Sustain Growth Amid Detect Segment Dip

Strong Revenue Growth and Positive Earnings Outlook

Ava Risk Group Limited (ASX: AVA) has delivered a promising trading update for the second quarter of fiscal 2025, with expected first-half revenue reaching $17 million, marking a 20% increase compared to the previous year. This growth aligns with the company’s guidance and reflects a strengthening commercial team and a more stable cost structure, which together underpin an anticipated positive EBITDA for the half-year period.

CEO Mal Maginnis highlighted the company’s progress, noting that the restructuring of the commercial team has stabilized costs and is expected to enhance profitability. The company’s scalable cost base positions it well to support future earnings growth as it capitalizes on a growing sales order backlog.

Robust Sales Order Intake and Backlog

During Q2 FY2025, Ava Risk Group secured $7.4 million in confirmed sales orders, contributing to a total H1 intake of $16.3 million. The order backlog at the end of the quarter stood at $7.6 million, including $2.4 million in contracted annual recurring revenue from multi-year service agreements. This backlog primarily comprises equipment orders and commissioning services expected to be fulfilled in the second half of the fiscal year.

The company’s three business segments, Detect, Illuminate, and Access, show varied performance. The Detect segment recorded $4.5 million in Q2 orders, totaling $10.9 million for H1, slightly down from the prior year due to a large one-off order in the previous period. However, repeat orders for the Aura Ai-X system, particularly for Eastern European border protection, underscore the product’s competitive edge, with some orders replacing competitor technology.

Illuminate maintained steady order intake, supporting the expansion of contracts such as the Sydney Metro project, while Access experienced a dip compared to last year’s initial stocking order but remains supported by strong demand in Europe and Asia Pacific.

Strategic Expansion in Key Verticals

Ava Risk Group continues to deepen its footprint in strategically important sectors. The company has expanded deployments of its fibre optic sensing technology for airport perimeter protection at major airports in Dubai and North America. Additionally, the relationship with UGL has grown, with new contract variations supporting the Sydney Metro project and joint development activities involving the Illuminate segment.

These developments reflect Ava Risk Group’s focus on high-value infrastructure protection, including sovereign border security and transportation, where its technology platform demonstrates strong market differentiation and growth potential.

Outlook and Strategic Priorities

Looking ahead, Ava Risk Group is confident in accelerating growth during the second half of FY2025. The company’s strategy emphasizes increasing sales order intake and backlog, expanding recurring revenue streams, maintaining high gross margins between 60% and 65%, and leveraging a scalable cost base to sustain positive EBITDA.

The upcoming half-year financial results, due for release on 25 February 2025, will provide further clarity on the company’s financial trajectory and operational execution. Investors will be keen to assess how Ava Risk Group’s investments in commercial capability and technology innovation translate into sustained growth and profitability.