X2M Connect Limited has secured a $3 million capital raise to fund expansion into new markets and reduce debt, following a robust first half of FY26 marked by significant revenue and profit growth.
- Two-tranche placement raising $3 million, with $1.52 million completed
- Strong H1 FY26 results: 45% revenue growth, 35% gross profit increase
- Expansion plans into Japanese and Australian water markets
- Debt reduced from $7.2 million to approximately $602,000
- Approximately $4 million contracted revenue expected in H2 FY26
Capital Raise to Fuel Strategic Growth
Australian Internet of Things (IoT) specialist X2M Connect Limited (ASX:X2M) has announced a $3 million capital raise through a two-tranche placement aimed at bolstering its growth trajectory and strengthening its balance sheet. The first tranche, raising $1.52 million, has already been completed, with the remaining $1.48 million subject to shareholder approval in an upcoming general meeting.
The funds will be strategically deployed to support X2M's entry into the Japanese water market, expand its footprint within Australia, enhance its platform capabilities, and cover general working capital needs. A portion of the proceeds will also be used to repay approximately $1.8 million in existing convertible loans, significantly reducing the company’s debt burden.
Strong Financial Momentum in FY26
This capital raise follows a solid first half of FY26, where X2M reported a 45% increase in revenue and a 35% rise in gross profit compared to the previous corresponding period. The second quarter was particularly impressive, with revenue growth accelerating to 65% and gross profit up 63% year-on-year. These figures highlight tangible momentum as the company executes on contracts and expands its customer base.
Looking ahead, X2M has approximately $4 million in contracted revenue expected to be recognised in the second half of FY26, providing strong visibility and confidence in continued growth. CEO Mohan Jesudason emphasised that the company’s expansion into new markets and ongoing deployments with major metropolitan customers underpin positive growth expectations.
Debt Reduction and Financial Flexibility
One of the most notable outcomes of this capital raise is the substantial reduction in debt. Starting the financial year with $7.2 million in debt, X2M expects to bring this down to around $602,000 in convertible notes maturing in 2028 after the raise and loan repayments. This improved financial position is expected to ease pressure on cash flows and allow the company to focus on operational growth.
The company also plans to issue free attaching options to investors, subject to shareholder approval, which could provide additional capital upside and shareholder value over the next three years.
Outlook and Market Positioning
X2M’s core IoT platform supports a diverse range of utility and government customers across multiple geographies, including South Korea, Taiwan, and the Middle East. The company’s technology enables real-time data exchange and predictive insights, which are increasingly critical in water, gas, and electricity management.
With the capital raise completed and a clear strategy to penetrate the Japanese and Australian water markets, X2M is positioning itself for a significant growth phase. The company expects to substantially reduce adjusted EBITDA losses in FY26 compared to FY25, signalling improving operational efficiency alongside revenue growth.
Bottom Line?
X2M’s $3 million raise and debt reduction set the stage for accelerated growth, but market expansion execution will be key to sustaining momentum.
Questions in the middle?
- Will shareholder approval for the second tranche and options issuance be secured smoothly?
- How effectively can X2M penetrate the competitive Japanese and Australian water markets?
- Can the company sustain its strong revenue growth and improve profitability in the coming quarters?