How Is X2M Connect Turning $6M Contracts into Growth Momentum?

Strong Financial Start to FY26

Australian IoT specialist X2M Connect Limited (ASX, X2M) has reported a robust start to its 2026 financial year, posting a 25% increase in revenue to $2.1 million for the first quarter. This growth was accompanied by a 7% improvement in adjusted EBITDA loss, narrowing it to $0.6 million, signaling operational efficiencies despite ongoing investment in growth initiatives.

The company’s gross profit rose 10% to $0.9 million, reflecting stronger sales particularly in South Korea, while operating costs edged up modestly by 3%, largely due to capital raising and debt restructuring expenses. These financial results underscore X2M’s ability to scale its business while managing costs effectively.

Contract Wins Fuel Growth Momentum

Central to X2M’s positive outlook is the securing of approximately $6 million in new contracts expected to be recognised during FY26. A standout is the expanded $3.3 million public safety contract with the City of Seoul, involving deployment of 100,000 personal safety devices with plans to scale to one million units over time. Deployment is set to commence in December 2025, spanning the second and third quarters.

Additionally, X2M’s partnership with Dubai-based Dicode Smart Connect Electronics LLC has matured into a 10-year SaaS agreement for remote monitoring solutions in the UAE, with ambitions to extend across the Middle East. This contract is expected to generate annual EBITDA of approximately A$0.4 million per 100,000 devices added, highlighting a recurring revenue stream from the region.

In Taiwan, the company’s Hive.AI platform is gaining traction in the renewable energy sector, contributing to a growing pipeline of prospects and initial sales, further diversifying X2M’s geographic and sector footprint.

Balance Sheet Strengthened and Debt Reduced

X2M’s balance sheet has been materially strengthened following a successful capital raise of $5.4 million during the quarter. This influx of funds enabled the company to reduce net debt dramatically from $5.5 million at the end of June 2025 to just $0.7 million by September 30, 2025, through a combination of debt-to-equity conversions and repayments.

Cash reserves stood at $1.8 million at quarter-end, providing a solid liquidity buffer as X2M continues to invest in product development and market expansion. The company’s net cash outflows from operating activities increased slightly to $1.67 million, reflecting timing of payments and strategic cash advances in key markets.

Outlook, Building on Momentum

CEO Mohan Jesudason expressed confidence in the company’s trajectory, citing strong contract momentum and operational alignment as foundations for sustained growth. With $4 million in contract revenue yet to be recognised this year and a robust pipeline of new prospects, X2M is well positioned to capitalize on expanding IoT opportunities across Asia-Pacific and the Middle East.

As X2M continues to scale its platform, particularly in public safety and renewable energy sectors, investors will be watching closely to see how these contracts translate into revenue and profitability in coming quarters.