• Successfully closed acquisition of Alpha Digital, boosting recurring revenue
• Group sales revenue increased 27% QoQ, with 95% recurring sales
• Gross margin of 68%, down 7ppts QoQ due to lower margin Alpha Digital
• Maintained 97.9% monthly customer retention rate, added 4 new customers

XPON Technologies Group Ltd (ASX:XPN), an AI marketing technology company, released its quarterly activity report and Appendix 4C for the three-month period ended 30 June 2025. Key highlights include the successful closure of the Alpha Digital acquisition on May 7, 2025, which immediately boosted recurring revenue by $4m and added c$1m in cash. The integration of Alpha Digital is progressing very positively, with first cross-sell deals already closed and a number of new joint Alpha + Wondaris + XPON deals in the pipeline. Group sales revenue increased 27% QoQ to $2.7m, primarily driven by the Alpha Digital acquisition, with recurring sales revenue accounting for $2.5 million (95%) of the quarter's total, annualising to $10.1 million. Gross margin was 67%, down 7ppts QoQ, attributed to the lower margin managed services revenue stream from Alpha Digital. The company successfully landed 4 new customers and expanded relationships with 3 existing customers, while maintaining a robust monthly customer retention rate of 97.9%. XPON maintained a cash position of $2.7m as of 30 June 2025. Ongoing cost optimisation actions were taken to align with the future product-led revenue mix, with c$560k additional annualised costs removed in early July 2025. The Wondaris product-led sales motion is being further optimised, with key vertical offerings developed for the banking & financial services, retail, education, and publishing industries. The company is also in ongoing discussions with multiple parties on the refinance of the outstanding convertible notes.

Group EBITDA and operating cash flow expected to be positive on an underlying basis from Q2 FY26.

The company's key priorities for FY26 include continuing to optimise the sales strategy towards high-margin long-term recurring revenue growth, accelerating AI innovation with Wondaris to speed up sales cycles and enhance customer value, simplifying the product-led sales motion with key vertical industry offerings, continuing momentum on the M&A strategy, finalising convertible note refinancing, and ensuring a strong corporate culture and high employee engagement.