IXUP’s Cash Burn Narrows Amid Contract Execution Risks and Market Expansion Plans

Strategic Transformation and Contract Wins

IXUP Limited (ASX: IXU), a leader in high-tech problem gambling self-exclusion solutions, has unveiled a robust growth trajectory for 2025 following a transformative quarter. The company’s recent submission of its Q2 FY25 Appendix 4C and quarterly activities report highlights a pivotal contract win with iGaming Ontario (iGO), marking its largest deal to date. This CAD$9.5 million, five-year agreement (with a potential three-year extension) positions IXUP as a key player in the Canadian RegTech market, complementing its existing Australian BetStop™ contract with the ACMA.

With the iGO contract now in the execution phase, IXUP is building Ontario’s first centralized self-exclusion system, leveraging its proven BetStop™ technology that has already enrolled over 36,000 users and processed more than 22 billion checks globally. The company’s ability to maintain 100% system uptime and sub-5 millisecond response times underscores its technological edge in this niche but rapidly expanding sector.

Financial Discipline and Cash Flow Outlook

IXUP’s financials reveal a disciplined approach to cost management, with $2.7 million in annualised cost savings implemented during the quarter. These savings stem from staff redundancies, software provider terminations, and working capital adjustments, which collectively align the company’s cost base with its current revenue-generating contracts. After adjusting for one-off restructuring expenses, operating cash outflow narrowed to $0.8 million for the quarter.

Quarterly cash receipts remained steady at $1.95 million, reflecting stable revenue streams from existing contracts. Importantly, IXUP received a $1.14 million R&D rebate in January 2025, bolstering its cash position to $2.7 million. The company anticipates a progressive increase in cash inflows throughout 2025, driven primarily by the ramp-up of the iGO contract, with a clear target of achieving positive operating cash flow by the fourth quarter of calendar year 2025.

Expanding Market Footprint and Product Focus

Beyond RegTech, IXUP’s Secure Data Engine (SDE) technology is advancing environmental data analytics through its integration with Microsoft Azure for the Shared Environmental Analytics Facility (SEAF) project in Western Australia. Meanwhile, its datapowa division is actively pursuing global sports marketing analytics opportunities, including a finalist position in a major RFP with a global sports management agency.

The company’s strategic pivot towards market-driven product development and streamlined operations reflects a sharpened commercial focus. IXUP is also bidding on a significant domestic land-based gambling self-exclusion contract, aiming to develop an omni-channel solution that integrates online and on-premise exclusion capabilities, potentially expanding its total addressable market substantially.

Outlook and Strategic Considerations

IXUP’s management remains cautiously optimistic, noting that government procurement timelines can vary, which may impact contract execution schedules. The company continues to explore M&A opportunities within the global RegTech space to bolster its market position, though no deals have advanced to disclosure stage. The recent $3.2 million capital raise, including participation from institutional investors, provides additional runway to support growth initiatives.

As IXUP navigates its transition to cash breakeven, the interplay between contract delivery, cost discipline, and pipeline conversion will be critical. The company’s unique position as the operator of the world’s only advanced centralized self-exclusion systems offers a competitive moat, but execution risks remain inherent in scaling new contracts internationally.