AI-Media Technologies has reported a robust first half of FY26, achieving an 80% increase in annual recurring revenue driven by its LEXI suite and unveiling a new Hardware as a Service model set to transform its business.
- 80% growth in annual recurring revenue (ARR) reaching $30 million
- Launch of Hardware as a Service (HaaS) model planned for second half of FY26
- Tech revenue up 12% while services revenue declined 33%
- Adjusted EBITDA loss narrowed significantly to $0.4 million
- Global expansion to 43 countries supported by regulatory tailwinds like the European Accessibility Act
Strong ARR Growth Signals Strategic Shift
AI-Media Technologies (ASX: AIM) has delivered a compelling first half of FY26, marked by an 80% surge in annual recurring revenue (ARR) to $30 million. This growth was largely powered by the company’s LEXI suite, which has become the cornerstone of its transition towards a technology-driven, recurring revenue model. The milestone of achieving 80% technology revenue by December 2025 underscores a structural shift in AIM’s business, moving away from legacy services towards scalable, high-margin software and hardware offerings.
Financial Performance Reflects Operational Leverage
Despite a slight 6% decline in total revenue to $29.8 million, tech revenue increased by 12%, reflecting the company’s successful pivot. Services revenue, however, fell by 33%, consistent with the strategic de-emphasis on lower-margin legacy offerings. Gross margin expanded to 70%, driven by an 84% margin on tech revenue, highlighting improved profitability. Adjusted EBITDA loss narrowed dramatically to $0.4 million, an 89% improvement year-on-year, while free cash flow turned positive at $2.4 million, signalling a clear inflection point towards cash generation.
Innovation and Product Development at the Forefront
AI-Media continues to invest heavily in research and development, expensing $5.1 million in the half to support the rollout of new products. A key highlight is the upcoming launch of new Encoder products and the introduction of a Hardware as a Service (HaaS) commercial model in the second half of FY26. This model aims to simplify customer acquisition and retention by converting upfront hardware costs into predictable, recurring monthly revenues, enhancing long-term customer value and operational scalability.
Expanding Global Footprint and Regulatory Tailwinds
The company’s global reach now spans 43 countries, with recent additions including Chile, Taiwan, Italy, and Vietnam. Regulatory developments such as the European Accessibility Act, effective from mid-2025, have created significant market opportunities in Europe, where AIM is gaining traction. The company’s focus on high-trust, professional-grade AI-powered captioning and translation services positions it well to capitalize on growing demand for accessible live media content across broadcast, enterprise, and government sectors.
Leadership and Strategic Outlook
Under the stewardship of Co-founder and CEO Tony Abrahams and CFO Jason Singh, AIM has refreshed its board with seasoned directors possessing deep technology and ASX experience. This leadership team is steering the company through a critical growth phase, balancing aggressive product innovation with disciplined financial management. The company’s strategic pillars focus on product expansion, segment differentiation, and geographic penetration, aiming to replicate North American successes in Europe and Asia while leveraging AI advances to expand its total addressable market.
Bottom Line?
AI-Media’s transition to a recurring revenue model and launch of HaaS set the stage for sustained growth and margin expansion in FY26 and beyond.
Questions in the middle?
- How will the new Hardware as a Service model impact revenue recognition and cash flow in 2H26?
- What are the risks and opportunities associated with expanding into new international markets under evolving accessibility regulations?
- How will continued investment in AI-powered products like LEXI Voice and LEXI AI translate into competitive advantage and customer acquisition?