Vection Reports $17.4M Pro-Forma Revenue and First Positive Operating Cash Flow in 2Q25

Financial Turnaround and Growth Momentum

Vection Technologies Ltd (ASX:VR1) has delivered a standout performance in the second quarter of FY25, reporting a milestone positive operating net cash flow in what is historically its weakest quarter. The company’s pro-forma unaudited revenue for the first half of FY25 surged to $17.4 million, a 60% increase from the previous half-year, underpinned by strong demand for its AI and extended reality (XR) solutions.

This financial uplift is further highlighted by a dramatic rise in recurring revenue, which now accounts for approximately 34% of total pro-forma revenue, a significant jump from just 10% for the full FY24. This shift signals a strategic move towards more predictable, subscription-based income streams, enhancing the company’s revenue stability and growth potential.

Strategic Acquisition and Product Innovation

The acquisition of The Digital Box S.p.A. (TDB) has been a pivotal factor in Vection’s recent success. Completed in early January 2025, this deal has expanded Vection’s AI capabilities and customer base by over 3,000 clients and 100 resellers. The integration of TDB’s generative AI technology has enriched Vection’s product suite, exemplified by the launch of the AI-driven 'Algho' platform in partnership with Dell Technologies.

Algho has already secured key contracts, including a $1.6 million healthcare licensing deal with Brexia Med and a $0.7 million partnership with KIOSK Embedded Systems, demonstrating the commercial viability and cross-sector appeal of Vection’s AI-XR integration. Additionally, a $3.6 million XR software licensing agreement with Cometa SpA aims to transform education delivery across 500 Italian high schools, underscoring Vection’s expanding footprint in the education sector.

Operational and Corporate Developments

Operationally, Vection has made significant strides in broadening its market reach and technological capabilities. The company secured a $1.8 million defence contract for AI-driven ICT and XR solutions and entered a strategic partnership with DigiLens to integrate its XR applications into ARGO smart glasses. These developments position Vection at the forefront of spatial computing innovation across multiple high-value sectors.

On the corporate front, Vection strengthened its leadership team by appointing Marco Landi, former Apple COO, as Independent Non-Executive Chair, bringing invaluable global technology scaling experience. Cameron Petricevic also joined as an Independent Non-Executive Director, enhancing governance and strategic oversight.

Cash Flow and Financial Position

Vection’s cash flow profile improved markedly, with operating cash inflows turning positive at approximately $0.1 million for 2Q25, a sharp recovery from a negative $4.1 million in 1Q25 and $1.2 million in the prior corresponding period. The company ended the quarter with underlying cash and cash equivalents of around $4.0 million, including $0.4 million from TDB, and maintained a stable debt position of approximately $9.3 million, primarily secured against receivables.

Investments in technology development and intellectual property continued, with cash outflows of about $1.9 million, reflecting Vection’s commitment to innovation and future growth.

Outlook and Strategic Focus

Looking ahead, Vection is focused on expanding its AI and XR solutions across enterprise, government, and education sectors globally. The company aims to leverage partnerships with Dell Technologies, SolidWorld, and DigiLens to broaden market access and enhance recurring revenue streams through subscription services. Geographic expansion into the USA, EMEA, and APAC regions is also a priority.

With a robust operational framework, a strengthened leadership team, and a clear strategic vision, Vection Technologies is well-positioned to capitalise on the growing demand for integrated AI and XR solutions, promising sustainable growth and long-term shareholder value.