Beonic’s ARR Decline Raises Questions Despite Strong Contract Wins and Profitability

Strong Quarter Marks Strategic Progress

Beonic Limited has delivered a robust Q2 FY26 performance, highlighted by a significant contract win in Morocco and a decisive move to strengthen its balance sheet. The company secured the first major phase of its landmark Moroccan Airports project, valued at $7.3 million over 30 months, covering passenger flow management solutions across seven airports. This milestone validates Beonic's strategic focus on the global aviation sector and sets the stage for further growth.

Alongside this, Beonic successfully raised $4.27 million in capital, anchored by its largest shareholder, Thorney Investment Group, with strong participation from the Board and management. The funds were promptly deployed to repay a $4.65 million USD loan facility, eliminating a significant interest expense and providing working capital to accelerate product development and innovation initiatives.

Financial Health and Operational Efficiency

The company reported an improved gross margin of 78.0% year-to-date, up from 77.3% in FY25, reflecting ongoing efforts to enhance profitability. EBITDA profitability stood at a healthy 13.1%, supported by positive net cash flow from operations of $750,000 for the quarter, despite one-off cost-cutting expenses. This marks the third consecutive quarter of operational cash flow positivity, underscoring Beonic's transition to a leaner, more profitable business model.

Recurring revenue remains a focus, with $4.1 million recorded for the quarter and an annualised recurring revenue (ARR) of $16.3 million, though this reflects a slight decline due to anticipated churn in the UK and a temporary suspension by a US customer. The company expects the Moroccan Airports project to add approximately $2.28 million in ARR upon completion of Phase 1 by June 2026, potentially lifting FY26 ARR to between $17.5 million and $18.0 million.

Contract Wins and Renewals Across Regions

Beonic's footprint continues to expand globally. The company secured $1.9 million in new contracts and expansions during the quarter, including a multi-year agreement with Denver International Airport, the third largest in the US. Additionally, $3.0 million in contract renewals were secured with prestigious partners such as Miami International Airport, David Jones, JB Hi-Fi, and others across the US, APAC, and EMEA regions. These wins demonstrate sustained demand for Beonic's AI-driven IoT solutions in airports and retail environments.

Looking Ahead – Growth and Innovation

Beonic's FY26 priorities focus on sustainable growth through pipeline conversion, market expansion, and continued operational discipline. The company plans to accelerate its AI-based CCTV product rollout in North America and complete the Moroccan Airports project rollout within the fiscal year. Maintaining a lean cost structure while scaling revenue operations remains a key objective, alongside enhancing customer success and investing in R&D to maintain competitive advantage.

CEO Billy Tucker emphasised the company's disciplined execution and strategic progress, highlighting the importance of debt repayment and capital raise in supporting Beonic's evolution as a profitable leader in AI-driven IoT solutions.