AoFrio Reports 28% Revenue Decline in Q1, Launches New IoT Products in Q2
AoFrio’s first quarter revenue plunged 28% year-on-year, weighed down by the loss of a major US motor customer amid tariffs. The refrigeration tech firm is banking on new IoT product launches in Q2 to stabilise sales and improve profitability over 2026.
- Q1 revenue down 28.1% to $17.2m, motor business halved by tariffs
- IoT segment shows resilience with only 3.4% revenue decline
- SCS800 controller and iQ SaaS platform set for Q2 commercial launch
- Q2 revenue expected to match prior year, full-year EBITDA forecast to improve
- Operating costs rise slightly, EBITDA negative at $0.4m loss
Tariffs Slash Motor Revenue, Dragging Overall Sales
AoFrio Limited (NZX:AOF) stumbled out of the gate in 2026, with first quarter revenue tumbling 28.1% to $17.2 million compared to the same period last year. The sharp decline was driven by a 52.9% collapse in motor revenue, from $12.1 million to $5.7 million, following the loss of its largest US motor customer amid ongoing tariffs. This segment, historically a significant contributor, has taken a substantial hit, underscoring the tangible impact of trade tensions on hardware manufacturers.
IoT Business Provides a Cushion Amidst Downturn
Despite the motor segment’s woes, AoFrio’s higher-margin IoT business showed relative resilience, with revenue dipping only 3.4% to $11.4 million. This steadiness highlights the strategic pivot towards software-enabled solutions in commercial refrigeration. The company’s Chair John Scott emphasised that the downturn was anticipated and part of a planned transition away from lower-margin motor sales towards IoT offerings.
New Product Launches Target Revenue Recovery in Q2
Looking ahead, AoFrio is set to launch its SCS800 cellular controller and iQ SaaS platform commercially in Q2 2026. These products are designed to accelerate revenue growth in North America and Europe, two key markets. Additionally, the iQ Food Retail solution has gone live, securing an order from a major Latin American supermarket after a successful trial. The company expects Q2 revenue to be broadly in line with the prior year, signalling cautious optimism that the new product cycle will arrest the recent decline.
Financials Reflect Transitional Strain
Gross margin improved to 34.8% from 31.1% a year earlier, reflecting the higher-margin IoT mix. However, operating costs crept up to $6.4 million from $5.9 million, contributing to an EBITDA loss of $0.4 million compared to a $1.5 million profit in 1Q25. Cash reserves remained stable at $1.4 million, supported by a net operating cash inflow of $1.9 million, down from $4.5 million previously. These figures underline the transitional strain as AoFrio rebalances its business model.
Management Confident Despite Early Setback
Chair John Scott framed the quarter as a ‘blip’ rather than a structural problem, noting the company’s deliberate strategy to offset tariff-driven losses with IoT growth. The management team is banking on the commercial success of the SCS800 and iQ platform to drive a rebound in revenue and EBITDA for the full year. Investors will be watching closely to see if these new offerings can gain traction quickly enough to restore momentum.
Bottom Line?
AoFrio’s near-term recovery hinges on executing its IoT product launches and winning market share in competitive North American and European markets.
Questions in the middle?
- Will the SCS800 and iQ SaaS platform achieve timely commercial traction to offset motor losses?
- How will ongoing US tariffs continue to influence AoFrio’s motor business and overall strategy?
- Can AoFrio sustain its improved gross margin while managing rising operating costs during this transition?
