TZ Limited’s Rising Debt Raises Questions Despite Sales Gains

Steady Sales Growth Amid Challenging Conditions

TZ Limited (ASX – TZL) has reported a promising start to its 2026 financial year, with sales revenue reaching A$3.14 million in the September quarter. The company’s monthly sales showed a clear upward trajectory, climbing from A$560,000 in July to nearly A$2 million in September. This improvement signals a recovery from the recent economic slowdown and tariff-related challenges that had previously weighed on the business.

Financial Position and Cash Flow Dynamics

Despite the encouraging sales momentum, TZ recorded a net operating cash outflow of A$671,000 for the quarter. Operating costs, including manufacturing, staff, and administration, remained substantial, while interest expenses added further pressure. To support ongoing operations and new sales initiatives, the company secured an additional A$750,000 in borrowings, bringing total debt to A$6.25 million. Cash reserves stood at A$567,000 at quarter’s end, underscoring the need for continued cash flow improvement.

Microsoft Orders and Strategic Growth Initiatives

A key highlight for TZ was the successful delivery and installation of initial Microsoft orders earlier in the quarter, which has now led to three additional orders exceeding A$300,000 in late October. This growing engagement with Microsoft not only validates TZ’s technology but also strengthens its position in the competitive data centre security market. Alongside Microsoft, several major US corporate clients have indicated significant upcoming capital expenditure, potentially expanding TZ’s footprint in secure smart-locker and data centre access solutions.

Outlook and Revenue Guidance

Management reaffirmed its FY2026 revenue guidance of A$17 million to A$21 million, buoyed by the expanding order book and improving business conditions. The Data Centre Security division, in particular, is expected to see substantial growth, with projected annual revenues approaching A$5 million, up from around A$1 million in the previous year. This division’s progress is a critical component of TZ’s strategy to build a scalable, high-margin recurring revenue base.

Investor Engagement and Market Confidence

During the quarter, TZ actively engaged with institutional investors across Asia, including presentations at the Ignite Investment Summit in Hong Kong. The company’s innovative KeyVision™ platform and data centre security offerings attracted strong interest, reflecting growing market confidence. These investor relations efforts are likely to support future capital raising initiatives as TZ continues to execute its growth strategy.