Spacetalk Ltd has completed a major pivot from hardware to a scalable software-as-a-service model, driving a 26% increase in active mobile subscribers and a 9% rise in annual recurring revenue to $12 million.
- 26% growth in active mobile subscribers to 57,400
- 20% increase in mobile recurring revenue
- Annual recurring revenue up 9% to $12 million
- Device revenue declined 19% amid strategic shift
- New AI-powered seniors’ device pilot planned for 2QFY27
Transformative Quarter Marks Strategic Pivot
Spacetalk Ltd (ASX, SPA) has reported a pivotal quarter ending December 2025, marking a significant transformation from a hardware-centric business to a software-led, subscription-based model. This shift was underpinned by the successful launch of a new platform and technology stack, designed to enhance scalability and unlock new growth avenues.
The company’s active mobile subscriber base surged 26% year-on-year to 57,400, fueling a 20% increase in recurring mobile revenue. This subscriber growth is a critical metric, reflecting the market’s positive reception to Spacetalk’s evolving family safety ecosystem and its SaaS approach.
Financial Performance Reflects Strategic Rebalancing
While device revenue declined by 19% in the first half of FY26 due to inventory drawdowns and a deliberate pivot away from hardware, total income remained stable at around $10.1 million. The decline in hardware sales was offset by a 30% increase in recurring mobile subscription revenue, highlighting the company’s successful transition to higher-margin, cash-generative software revenue streams.
Annual recurring revenue (ARR) rose 9% to $12 million, with Spacetalk Mobile now representing 42% of total customer revenue, up from 28% the previous year. This shift in revenue mix contributed to a 3% improvement in gross margin to 50%, underscoring the financial benefits of the SaaS model.
Operational Advances and Growth Initiatives
Spacetalk’s new platform incorporates Customer Value Management (CVM) capabilities, aimed at boosting customer retention, increasing average revenue per user, and reducing acquisition costs. Despite initial challenges related to data migration and service outages, the platform is now stabilised and positioned to support future growth.
The company is actively pursuing partnerships with major global telecommunications providers to embed its family safety platform within telco ecosystems. These discussions could significantly accelerate subscriber growth and expand Spacetalk’s addressable market.
International expansion is progressing through a capital-light, e-commerce-first strategy across Europe, the UK, Singapore, the USA, Canada, and New Zealand. Plans to establish selective retail partnerships in key markets are underway to enhance brand awareness and drive customer acquisition.
Innovation Pipeline and Future Outlook
Product innovation remains central to Spacetalk’s strategy. The company is developing next-generation kids’ devices with improved cost structures and margins, alongside an AI-powered seniors’ device called Sibyl. Sibyl leverages predictive analytics to provide fall prediction, emergency alerts, and health insights, targeting the growing “sandwich generation.” A pilot for Sibyl is scheduled for the second quarter of FY27.
Spacetalk reconfirmed its guidance for annual recurring revenue of $20-25 million in calendar year 2026, reflecting confidence in its SaaS transition, subscriber growth, and strategic partnerships.
Bottom Line?
Spacetalk’s SaaS transformation and subscriber momentum set the stage for accelerated growth, but execution of telco partnerships and new product pilots will be critical next steps.
Questions in the middle?
- When will Spacetalk announce concrete telco partnership agreements?
- How will the Sibyl pilot impact revenue and market positioning in FY27?
- Can Spacetalk sustain subscriber growth amid competitive pressures and platform migration challenges?