TZ Limited reported a quarterly cash outflow of A$790,000 impacted by payment timing but maintains full-year revenue guidance amid strategic advances in smart locker and data centre security sectors.
- Q2 operating cash outflow of A$790,000 due to delayed large payment
- 1H FY26 revenue 30% below expectations at A$5.5 million
- Full-year revenue guidance maintained at approximately A$17 million
- Keyvision integration completed; focus shifts to sales expansion
- Factoring facility and debt repayment extension to improve liquidity
Quarterly Financial Performance
TZ Limited (ASX, TZL) disclosed a cash outflow of A$790,000 for the quarter ended 31 December 2025, a figure notably influenced by the timing of a substantial payment that was contractually due mid-December but only received after the quarter closed. Despite this setback, the company recorded receipts of A$2.6 million against operating payments totalling approximately A$3 million, including staff and manufacturing costs.
Revenue for the first half of FY26 came in at A$5.5 million, falling short of internal forecasts by around 30%. However, TZ remains optimistic about the second half, anticipating a material uplift that supports maintaining its full-year revenue guidance near A$17 million, albeit towards the lower end of the previously stated range.
Strategic Business Initiatives
In the smart locker and access segment, TZ has gained momentum from recent US education-sector conferences, prioritising installations and commissioning before the end of June 2026 to ensure revenue recognition within the current financial year. Corporate purchasing activities have also resumed following resolution of client-specific delays.
Data centre security remains a strategic focus, with ongoing sales efforts targeting Microsoft through Wesco Anixter. The company is finalising a factoring facility designed to unlock up to 95% of future purchase orders, enhancing working capital flexibility. TZ is also actively participating in several substantial tenders and expanding its global marketing and distribution footprint, supported by new business development hires.
Corporate Developments and Financial Position
The integration of Keyvision is now complete, with operational focus shifting to stabilising performance and driving sales growth in the second half of FY26. On the financing front, TZ successfully negotiated a rollover of a A$2.75 million debt repayment due at the end of December to mid-February, providing breathing room to execute funding strategies.
The company rejected a non-binding indicative offer of approximately A$8 million for its US subsidiary Telezygology Inc., which generates over A$2.5 million in annual recurring revenue. The board continues to evaluate inbound interest while exploring other corporate opportunities at an early stage.
Cash and financing facilities currently provide limited runway, with estimated funding for just over half a quarter based on current cash flows. Management expects this to improve in the second half of the year, contingent on successful installations and sales execution.
Operational Enhancements and AI Adoption
Operationally, TZ is advancing a review of its software and hosting infrastructure led by newly appointed director Anton Schiavello, aiming to enhance efficiency and strategic positioning. The company is also integrating artificial intelligence across multiple functions, including software development, multilingual marketing, platform localisation, and technical support, leveraging its smaller scale for agile adoption relative to larger competitors.
Bottom Line?
TZ’s ability to convert its strategic initiatives into tangible revenue and cash flow gains will be critical as it navigates tight liquidity and ambitious growth targets in FY26.
Questions in the middle?
- Will TZ secure the factoring facility on favourable terms to ease working capital constraints?
- How quickly can the company translate resumed corporate purchasing into sustained revenue growth?
- What impact will AI integration have on operational efficiency and competitive positioning?