How Is X2M Connect Driving 65% Revenue Growth and Market Expansion?
X2M Connect Limited reported a robust second quarter for FY26, with revenues climbing 65% and a notable narrowing of EBITDA losses, driven by strategic expansions in South Korea, Japan, and beyond.
- 65% revenue increase to $2.8 million in 2Q FY26
- Adjusted EBITDA loss improved by 12%, narrowing to $0.6 million
- Enterprise and government customers grew 10% to 88
- Strategic entry into Japan’s water digitisation market with Azbil Kimmon partnership
- Deployment of 100,000 HelpMe public safety devices in Seoul underway
Strong Financial Momentum
X2M Connect Limited (ASX, X2M) has delivered a compelling performance in the second quarter of FY26, posting revenues of $2.8 million, a 65% increase compared to the same period last year. Gross profit followed suit, rising 63% to $1.2 million, while the adjusted EBITDA loss narrowed by 12% to $0.6 million. This financial progress reflects both operational efficiency and expanding market traction.
Expanding Customer Base and Market Reach
The company’s enterprise and government customer base grew by 10% to 88, underscoring X2M’s growing footprint in the Internet of Things (IoT) sector. Notably, X2M secured multiple new and repeat contracts in South Korea, including significant municipal water digitisation projects covering thousands of households. The deployment of 100,000 HelpMe public safety devices in Seoul marks a major milestone, positioning the city as a strategic hub for future expansion.
Strategic Entry into Japan’s Water Digitisation Market
X2M’s partnership extension with Azbil Kimmon into Japan’s water sector represents a strategic breakthrough. The initial contract, valued at A$200,000, supports deployment across 5,000 water meters with potential expansion to 50,000. This move taps into a large, under-digitised market estimated at A$100 million annually, signaling significant growth opportunities for the company’s SaaS platform.
Broader Regional Progress and Outlook
Beyond South Korea and Japan, X2M has secured its first renewable energy mandates in Taiwan and continues to roll out its remote gas monitoring platform in the UAE. These developments collectively enhance the company’s addressable market and recurring revenue streams. CEO Mohan Jesudason highlighted the company’s confidence in achieving EBITDA positivity in the near term, driven by solid contract wins and expanding IoT solutions across multiple verticals.
Financial Position and Future Prospects
With net cash generated from operating activities at $1.7 million for the quarter and total cash reserves of $1.9 million as of December 31, 2025, X2M maintains a healthy liquidity position. Net debt remains modest at $0.2 million. While operating costs increased by 22%, this was partly due to one-off product replacement expenses, with normalised costs rising only 6%. The company expects continued revenue growth and a substantial improvement in adjusted EBITDA losses for the full fiscal year.
Bottom Line?
X2M’s strategic expansions and improving financials set the stage for a potentially transformative year ahead in the IoT sector.
Questions in the middle?
- How quickly can X2M scale its Japanese water digitisation platform beyond the initial contract?
- What impact will the HelpMe public safety device deployment have on recurring revenue streams?
- How will rising operating costs affect profitability as X2M pursues growth across multiple regions?
