FirstWave reaches positive EBITDA as AI products move towards launch

Positive EBITDA arrives alongside a sharp cash drawdown

FirstWave Cloud Technology Limited (ASX:FCT) has reached positive quarterly EBITDA, reporting A$190,000 on revenue of A$1.90 million for the three months ended 30 September 2026. Recurring revenue contributed A$1.68 million, while gross margin remained high at 94.5%.

The more uncomfortable number sits beneath the earnings headline. FirstWave used A$454,000 in operating cash, invested A$529,000 in capitalised product development and repaid A$250,000 of debt during the quarter. Cash consequently fell from A$1.33 million at 30 June to A$83,000 at quarter end, leaving the Appendix 4C calculation showing only 0.18 quarters of funding based on that closing balance and the quarter's operating cash use.

That calculation excludes the capital raised immediately after the reporting date. FirstWave completed a A$1.06 million placement on 2 October, issuing 151.3 million shares at A$0.007 each. The company said the net proceeds were received on 7 October and would support sales conversion, the Open-AudIT 7 release, the AI product launch and expansion in Latin America.

AI and compliance products move towards commercial tests

Open-AudIT 7 entered Linux beta during August, with testing under way among existing clients. The release includes automatic 30-day Enterprise trials and credential-free discovery for IoT, medical and industrial devices, while the full Windows and Linux release is scheduled for November. FirstWave said more than 20,000 organisations had upgraded to Open-AudIT 6 since its relaunch under a compliance-focused licence.

The company is also preparing to commercialise a provisional-patented network fault-diagnosis system that uses multi-agent artificial intelligence and large language models. The proposed system is designed to provide explainable root-cause diagnosis, learn device-specific thresholds and let engineers direct investigations through a conversational interface. FirstWave said John Deere and Telmex had requested the capability, but the filing does not disclose revenue from the product or a launch timetable beyond the company's preparation for commercial release. The development extends the AI fault-diagnosis patent filed in September.

Telstra channel renewed as December renewals approach

FirstWave extended its Secure Internet Gateway agreement with Telstra for another 12 months from July. Users served through the Federal Government channel increased by about 5%, lifting annual recurring revenue under the agreement by roughly 5% to approximately A$600,000. The renewal builds on the Telstra Federal Government extension, keeping FirstWave's CyberCision platform in the Telstra-branded channel serving Commonwealth agencies.

At 31 August, annual recurring revenue stood at A$5.54 million, comprising A$3.7 million from NMIS and related modules, A$1.4 million from CyberCision and A$400,000 from STM. Network monitoring remains the largest revenue line: FY26 revenue reached A$6.83 million, up 32% on the previous year and representing 82% of group revenue.

FirstWave said its annual cost base had been reset to A$8.1 million from October and described itself as funded for the foreseeable future following the placement. That claim will be tested against execution rather than the quarter-end cash snapshot. Approximately A$1.3 million of annual contracts fall due for renewal in December, while the company must also fund debt repayments and continued product development.