Vection Technologies Reports 14% Revenue Growth and $3.8m Adjusted EBITDA in FY26

Earnings Inflection Marks a Turning Point

Vection Technologies Ltd (ASX:VR1) has crossed a critical milestone in FY26, delivering a 596% leap in adjusted EBITDA to $3.8 million and recording its first-ever positive operating cash flow of $959,000. This marks a sharp turnaround from a modest $0.5 million EBITDA in FY25 and a negative cash flow position, signalling that the company’s investments in its INTEGRATEDXR® and AI platforms are starting to pay off.

Revenue rose 14% to $42 million, driven by a structural shift toward recurring, higher-margin contracts, with gross margins expanding by 18.3 percentage points to 65.1%. Underlying EBITDA, which strips out one-off acquisition and restructuring costs, climbed 178% to $6 million. Despite a net loss of $7.5 million, down 19.4% from the prior year, the trajectory points toward profitability as the business scales.

Dual Platform Engines Fuel Growth

The company’s progress hinges on two commercial engines now operating at scale. The defence segment secured $7.7 million in orders in FY26, including a $22.3 million multi-year framework with a NATO-approved partner, structured through to 2030 and scalable to $29.5 million. This framework has already yielded a $7.8 million initial order, with further deliveries expected. Additionally, Vection confirmed $1.64 million in annual recurring revenue (ARR) with a classified national security partner, reinforcing its foothold in the defence sector.

Meanwhile, the Algho AI platform gained traction across more than ten enterprise verticals, securing approximately $9.7 million in contracts in Q1 FY26 alone. Subsequent deals added $5.5 million across sectors including agritech, healthcare, and public administration, and a further $5.6 million in new ARR and projects by June 2026. Notably, a $3.3 million Accessibility Kiosk order embeds Algho AI in public terminals for airports and government offices, illustrating the platform’s expanding commercial footprint.

Strategic Acquisitions and Corporate Moves

FY26 saw Vection strengthen its balance sheet significantly through a $21 million institutional placement in September 2025, which funded defence expansion, platform development, and the acquisition of Digital Experience Labs (DXLabs) in March 2026. DXLabs, an Australian digital transformation and enterprise automation company, contributed positively from acquisition and is being integrated to enhance the Group’s APAC earnings.

The company also divested its non-core creative unit, Blank Canvas Studio, in July 2026, raising approximately $800,000 and sharpening its focus on higher-margin technology and AI services.

Robust Cash Position and Outlook

Cash and cash equivalents increased to $9.3 million, up $6.2 million year-on-year, supported by improved customer receipts of $41.5 million (+22%) and disciplined cash conversion. Net financial debt improved to $6.7 million, with net tangible assets per share recovering from a negative 1.60 cents to negative 0.41 cents, reflecting the strengthened equity base.

Post-period, Vection secured over $10.6 million in new orders, including a $3.2 million contract with Retelit Digital Services in Italy, certifying Algho AI as Retelit’s enterprise AI platform, and a $7.5 million three-year framework agreement with Switzerland’s URBANnext SA for smart city deployments. The company also received $1.2 million in non-dilutive government R&D grants supporting AI, XR, digital health, and inclusive AI initiatives, bolstering its working capital and validating its innovation pipeline.

Vection enters FY27 with a substantial contracted pipeline and two scalable platform engines across defence, healthcare, and retail. Strategic priorities include converting defence framework orders into revenue, accelerating Algho AI adoption in Europe, APAC, and the US, integrating DXLabs to boost regional EBITDA, and improving cash conversion from underlying earnings.