Mach7 Reports A$29.6M CARR and Key VHA Project Go-Live in Q1 FY26

A Quarter of Reset and Milestones

Mach7 Technologies Limited (ASX, M7T), a specialist in medical imaging software, has delivered a first quarter FY26 update that signals both challenge and opportunity. The company reported a Contracted Annual Recurring Revenue (CARR) of A$29.6 million and an Annual Recurring Revenue (ARR) run rate of A$23.5 million as of 30 September 2025. These figures reflect a business in transition, balancing a strategic reset with the successful deployment of a key contract.

CEO Teri Thomas described the quarter as a "reset" period, highlighting tough decisions made to enhance long-term profitability and operational excellence. Central to this was the initial limited go-live of Phase 1 of the Veterans Health Administration (VHA) National Teleradiology Project (NTP), a significant milestone that leverages Mach7’s Vendor Neutral Archive and diagnostic viewer to support critical clinical services such as telestroke and mammography for U.S. veterans.

Sales and Revenue Dynamics

Sales orders for the quarter totaled A$2.6 million, with a strong skew towards recurring revenue streams, 86% of sales orders were ARR-type, underpinning the company’s subscription and maintenance fees. While cash receipts declined 27% year-on-year to A$4.6 million, this was attributed mainly to timing issues related to legacy administrative processes, which the company expects to normalize in the second half of FY26.

The ARR run rate edged up slightly from the previous quarter, buoyed by the VHA contract go-live, offsetting a reduction in ARR from Trinity Health due to a planned scale-back of services. The backlog of contracted revenue not yet recognized stood at A$6.1 million, indicating future revenue potential as customers reach First Productive Use milestones.

Leadership and Strategic Transformation

Mach7 has undergone notable leadership changes, including the appointment of Todd Stallard as Vice President of Sales and Daniel Lee as Chief Financial Officer, alongside the return of founder Ravi Krishnan as a strategic advisor. These moves accompany a broader commercial transformation aimed at sharpening focus on high-value enterprise opportunities, particularly in Asia and the Middle East.

The company also completed a right-sizing of its leadership team and expanded its Malaysia hub to optimize costs and resource allocation. These organizational changes contributed to a 16% reduction in operating payments and an 18% decrease in staff costs compared to the prior year quarter.

Regulatory Progress and Market Positioning

On the regulatory front, Mach7 achieved a critical milestone by submitting its Medical Device Regulation (MDR) Technical File to the British Standards Institution, initiating the process toward CE marking expected by mid-FY26. This positions the company for expanded access to European and Middle Eastern markets and lays groundwork for future FDA approvals.

Mach7’s strategic review, currently underway, will culminate in updated FY26 guidance at the upcoming Annual General Meeting on 28 November 2025. The company has paused its on-market share buy-back program pending this review, signaling a cautious but forward-looking stance.

Looking Ahead

As Mach7 navigates this phase of transformation, the successful rollout of the VHA NTP Phase 1 and the potential Phase 2 expansion remain key growth drivers. The company’s focus on innovation delivery, commercial execution, and regulatory compliance will be critical to sustaining momentum and achieving a rebound in the second half of FY26.