X2M Connect delivers strategic transformation in FY25 with SaaS focus and global expansion

• FY25 was a year of strategic transformation for X2M which expanded into high-growth markets
• Contracts scheduled for H1 FY26 together with existing SaaS and maintenance revenue already exceed full-year FY25 revenue
• Company seeing momentum in new market of UAE and well placed for growth following capital raise

Special Report: Tech firm X2M Connect has delivered a year of strategic transformation in FY25, exiting low-margin hardware sales, refocusing on recurring SaaS and maintenance revenues and expanding into high-growth markets.

Internet of Things (IoT) company X2M Connect (ASX:X2M) has entered FY26 with good momentum with contracts scheduled for delivery in H1 FY26 together with existing SaaS and maintenance revenue already exceeding FY25 full-year revenue.

This comes after X2M navigated a softer South Korean market and exited its operations in China, with revenue from continuing operations falling to $6.5m, down from $11.3m in FY24.

However, despite the decline in top-line revenue, the company improved its gross profit margin to 47% in FY25, up from 42% in FY24, reflecting a higher share of recurring revenue.

Operating expenses fell to $6.9m from $8.1m in FY24 through cost control, lower headcount and operational efficiencies, underscoring disciplined management.

Enterprise and government customers rose 12% to 84 in FY25, supported by repeat orders and new sector expansion.

Key projects for future growth

In South Korea, where most of X2M’s revenue is generated, the company increased its market share despite challenging conditions, generating $5.4m in revenue from new remote water metering contracts across multiple municipalities.

The company also secured $2.5m in contracts scheduled for delivery in H1 FY26, plus the City of Seoul’s flagship IoT Portable Safety Alarm Project, a $3m initiative to supply 100,000 Help Me personal safety devices, with potential to scale to one million devices.

In the Middle East, X2M entered the UAE through a 10-year licensing agreement with Dicode Smart Connect Electronics for its Vision by X2M gas metering solution.

The partnership has already seen rapid traction, including a second major 2025 contract to install 10,000 smart gas meters, expected to generate $400,000 in gross profit over the next decade.

X2M also acquired a 7% equity stake in Dicode, retaining flexibility for future opportunities.

And the company has launched Hive.AI by X2M, in collaboration with Sirius Digitech, an AI-driven platform designed to improve operational efficiency and energy yield for renewable energy companies.

The platform has initially launched in Taiwan, with plans to expand across the Asia-Pacific region.

X2M enters FY26 with a strengthened balance sheet following a $5.4m equity raise and an additional $1.25m of borrowings directed to new equity.

Contracts scheduled for delivery in H1 FY26, combined with existing recurring revenue arrangements, already exceed FY25 full-year revenue, providing a particularly strong start to the new financial year.

‘Foundation for long-term growth’

CEO Mohan Jesudason said FY25 was a pivotal year for X2M.

“By exiting low-margin sales and focusing on recurring revenue streams, we have laid the foundation for long-term growth,” he said.

“Operational improvements, improved margins, and an expanding customer base demonstrate the progress we’ve made.

“Our partnerships are already delivering strong outcomes, from Dicode’s rapid traction in the UAE to securing major municipal contracts in South Korea and launching our AI-led renewable energy platform in Taiwan.”

Jesudason said he was confident that, with a strengthened balance sheet supporting expansion plans, FY26 will continue the strong momentum the business delivered in H2 FY25.

This article was developed in collaboration with X2M Connect, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.