Spacetalk Ltd reported a 17% revenue decline in FY26 amid a strategic reset, but mobile revenue grew 16% as the company pivots to a software-led family safety platform supported by new telco partnerships.
- FY26 revenue down 17% to $16.2 million due to re-platforming and Schools wind-down
- Mobile revenue up 16% to $8.1 million, now 50% of total revenue
- Recurring revenue mix increased to 66%, driven by mobile subscriber growth
- New partnerships with Vodafone Australia and TPG Telecom to accelerate software distribution
- Operating costs rose 61% due to technology investments and remediation efforts
Strategic Reset Hits Revenue but Sets Stage for Software Growth
Spacetalk Ltd (ASX:SPA) delivered FY26 results reflecting a company in transition. Total revenue fell 17% to $16.2 million, weighed down by a 33% drop in device sales and a planned wind-down of its legacy Schools business. However, the company’s pivot from hardware-led sales to a software-led, hardware-enabled model is gaining traction, with mobile revenue surging 16% to $8.1 million and now accounting for half of total revenue.
The transformation year was marked by a complex re-platforming of Spacetalk’s core technology stack, which disrupted the children’s wearables business temporarily but created a scalable foundation for future growth. CEO Simon Crowther described FY26 as a "necessary reset" that positions the company to capitalise on emerging opportunities in family safety software.
Recurring Revenue Strengthens Amid Platform Investment
Recurring revenue now comprises 66% of total revenue, up from 57% in FY25, reflecting a higher-quality revenue mix anchored by mobile subscribers. The annual recurring revenue (ARR) stood at $10.8 million, down 11% year-on-year, primarily due to the Schools segment decline. Excluding Schools, mobile ARR grew 5% to $8.4 million, supported by an 18% increase in active subscribers to 60,600, most on annual plans.
Gross profit declined 23% to $7.5 million with margins compressing to 46%, notably due to lower device margins from a shift to lower-priced variants and increased discounting. Operating expenses surged 61% to $20 million, driven by technology investments, third-party consulting, and remediation costs following the platform launch in November 2025. This resulted in an adjusted EBITDA loss of $10.2 million, a significant increase from the prior year’s $1.9 million loss.
Telco Partnerships Validate Software-Led Model
Post-year end, Spacetalk secured two pivotal agreements that underscore its software-led ambitions. The company signed a co-branded app deal with Vodafone Australia, enabling distribution of its family safety software to a large telco customer base. Concurrently, a wholesale mobile agreement with TPG Telecom promises improved unit economics, operational flexibility, and the ability to bundle premium app features with mobile plans.
These partnerships aim to replicate the Vodafone commercial model internationally, opening scalable B2B2C revenue streams through telco app licensing, monthly active user fees, premium feature upgrades, and data product licensing. The TPG deal also involves migrating Spacetalk Mobile to TPG’s network in FY27, enhancing margins and product flexibility across family segments.
New Revenue Model and Growth Catalysts Ahead
Spacetalk’s evolving revenue model layers hardware sales, connectivity, and software subscriptions into a compounding ecosystem designed to deepen household engagement and lifetime value. The company plans to launch the Vodafone co-branded app and introduce new digital features including online safety tools and tiered subscription pricing in 2QFY27. Additionally, Spacetalk is advancing its Sibyl seniors proposition, targeting an older demographic with connected care services.
Retail remains an important acquisition channel, with expansion into international markets such as the UK, Germany, Sweden, and the US underway. The company also expects to launch new kids hardware devices and apps for Apple and Samsung watches, further broadening its product suite.
Balance Sheet and Capital Raise Support Transformation
Spacetalk’s balance sheet reflects its transformation investments, with intangible assets rising to $4.3 million from $2.6 million due to capitalised platform development costs. Net liabilities widened to $11.9 million, partly driven by the issuance of $7.4 million in convertible notes.
During FY26, the company raised $7.5 million through equity placements and $6.6 million via convertible notes. Subsequent to year-end, Spacetalk secured binding commitments for a $10 million placement to fund platform enhancements, inventory growth, MVNO migration, and new device launches, providing a financial runway for FY27 execution.
Bottom Line?
Spacetalk’s FY26 reset has laid the groundwork for a scalable software-led growth phase, but execution of telco partnerships and platform monetisation will be critical to realise its potential.
Questions in the middle?
- How quickly will Spacetalk’s Vodafone and TPG partnerships translate into meaningful recurring revenue growth?
- Can Spacetalk sustain mobile subscriber growth while managing competitive pressures and margin compression?
- What is the timeline and market reception for Spacetalk’s new kids and seniors hardware and software offerings?