X2M Connect Reports 38% Revenue Growth and Advances Data Centre Strategy

Revenue Surge Driven by South Korea and New Products

X2M Connect Limited (ASX:X2M) posted a 38% jump in revenue to $8.94 million for the year ended 30 June 2026, primarily fuelled by strong sales in South Korea and new product launches. The company’s gross profit rose 28% to $3.9 million, while operating expenses were trimmed slightly by 1%, reflecting effective cost management.

South Korea remains X2M’s powerhouse market, accounting for $7.8 million in revenue, a 44% increase year-on-year. This growth was driven by deployments of remote water reading solutions across 58 municipalities and the delivery of 100,000 HelpMe personal safety devices in Seoul, generating $2.6 million in sales. A further 50,000-device order post-year end signals potential scaling to one million units, underpinning a solid revenue pipeline.

Losses Halved as Adjusted EBITDA Loss Narrows

The net loss after tax shrank by 59% to $5.26 million, with the adjusted EBITDA loss improving by 24% to $2.72 million. These results reflect the company’s strategic pivot away from low-margin hardware towards higher-margin SaaS and platform services, alongside a cost reduction program initiated earlier in the year.

Despite the loss reduction, X2M reported net liabilities of $3.19 million and a working capital deficiency of $4.32 million at year end, prompting a material uncertainty disclosure on going concern. However, management remains confident in the company’s capital position, bolstered by an $8.6 million capital raise during FY26 and a further $2 million placement post-year end, alongside a fully underwritten $1 million Securities Purchase Plan underway.

Expanding Customer Base and New Market Entries

X2M’s enterprise and government customer base expanded 12% to 91 clients, highlighting growing adoption of its AI-powered smart city technology across Asia Pacific and the Middle East. The company also marked strategic entries into Japan’s water digitisation market through a partnership with Azbil Kimmon and continued to develop its presence in Taiwan with the launch of its Hive.AI platform targeting renewable energy operators.

Importantly, X2M has established a wholly owned data centre subsidiary, X2MDC Pty Ltd, post-year end to spearhead its foray into the Australian data centre sector. This segment leverages the company’s existing AI and IoT platform to manage complex energy and infrastructure systems within data centre precincts, a market forecast to require up to $190 billion in investment by 2030. The company has already secured approximately $3 million in contracted revenue for FY27, including a mandate from Seoul for an additional 55,000 HelpMe devices.

Capital Raising and Balance Sheet Strengthening

FY26 saw X2M successfully raise $8.6 million through placements and an entitlement offer, with $2.1 million of borrowings converted to equity, reducing debt levels including convertible notes and loans. Subsequent to year end, the company raised an additional $2 million via placement at $0.004 per share, strengthening its balance sheet to support accelerated investment in data centre sensor integration, platform enhancements, and battery energy management systems.

The company’s capital management strategy aims to support growth in recurring revenues, geographic expansion, and entry into new verticals such as smart communities and data centres, while maintaining prudent control over operating costs.

Governance and Leadership Updates

In governance developments, X2M appointed Ms Kate O’Sullivan as a Non-Executive Director effective 1 July 2026, bringing additional expertise to the board. The company continues to emphasise diversity and inclusion, with gender diversity targets set for the board, senior management, and overall workforce.

The auditor, William Buck Audit (Vic) Pty Ltd, issued an unmodified opinion on the financial statements but noted a material uncertainty related to the going concern assumption, consistent with the company’s disclosures.