Quarterly Activities/Appendix 4C Cash Flow Report
| Stock | X2M Connect Ltd (X2M.ASX) |
|---|---|
| Release Time | 30 Apr 2025, 11:50 a.m. |
| Price Sensitive | Yes |
X2M's business transformation progressing with new contracts
- Q3 FY25 results reflect soft market in South Korea, exit of low margin hardware sales
- Secured first commercial contract in Middle East, launched AI solution for renewable energy
- Secured four new contracts in South Korea valued at A$1.7 million
X2M Connect Limited (ASX:X2M) reported its quarterly activity report and Appendix 4C for the period ended 31 March 2025. Q3 FY25 results reflect a continuation of a soft market in South Korea, the exit of low margin hardware sales and removal of associated costs. Revenue was $1.4 million, down 64% on the previous corresponding period, with approximately 25% of prior period sales being hardware sales in China. Gross margin increased to 47%, up from 32% on the pcp, driven by higher margin revenue recognized for the first deployment in the Middle East, higher proportion of SaaS and maintenance revenues, and the decline in hardware-only sales. Operating costs were down 9% on the pcp, primarily from lower headcount and administration expenses. Adjusted EBITDA was a loss of $1.1 million, up from a loss of $0.7 million pcp. The company executed its first commercial contract in the Middle East with Dicode Smart Connect Electronics, a 10-year contract for use of the X2M platform for gas operations in the UAE. X2M also launched its 'Hive.AI by X2M' AI solution for renewable energy companies, developed in partnership with Sirius Digitech. Shortly after the quarter, X2M secured four new contracts in South Korea valued at approximately A$1.7 million to digitize water services for 13,625 households. The company's total enterprise and government customer base stands at 82, up 11% on the pcp.
The company expects revenue from the Dicode contract in the Middle East to exceed A$250,000 during the first 12 months of operation, with the first revenues already secured in March 2025.
Contracts secured following the quarter end will result in deployments and revenue recognition in the first half of the new financial year, giving the company a running start into the 2026 financial year. The company's continued focus on innovation, strategic partnerships, and disciplined execution is building a stronger, more diversified business.