t42’s 2025 trading update: revenue up, margins higher, profit delivered
t42 IoT Tracking Solutions has put out a punchy full-year trading update for the year ended 31 December 2025. Headline takeaways: revenue climbed to over $6.1m from $4.16m, gross margins improved to around 45% from 38%, and the company swung to an operating profit of approximately $0.4m after an operating loss of $0.9m last year. EBITDA turned positive too, at around $1.05m versus a small loss in 2024.
For a small-cap IoT player focused on global container tracking, that’s a meaningful step forward. The gains look to be driven by a better sales mix – notably higher-margin Lokies smart padlocks – and continued growth in its Software-as-a-Service (SaaS) revenues.
What’s behind the improvement? Lokies and SaaS doing the heavy lifting
The RNS flags two clear drivers. First, a c.10% increase in SaaS revenues. SaaS is recurring software income, typically paid monthly or annually, and is often higher margin and more predictable than hardware sales. Second, strong demand for Lokies – t42’s secure, connected padlocks – which are highlighted as higher-margin products.
That combination is exactly what you want to see at this stage of the cycle: a richer revenue mix pushing gross margins higher while total sales expand. The gross margin move from 38% to around 45% suggests production cost efficiencies are coming through as well.
Key numbers from the 2025 trading update
| Metric (unaudited) | 2025 | 2024 |
|---|---|---|
| Revenue | Over $6.1m | $4.16m |
| SaaS revenue growth | c.10% increase | Not disclosed |
| Gross margin | c.45% | 38% |
| Operating profit/(loss) | c.$0.4m | $(0.9)m |
| EBITDA | c.$1.05m | $(0.2)m |
Quick jargon check:
- Gross margin – the percentage of revenue left after direct costs of production. Higher is better.
- EBITDA – earnings before interest, tax, depreciation and amortisation. A proxy for operating cash profitability.
- SaaS – Software-as-a-Service, typically recurring subscription income.
Where the demand is coming from
Management says interest remains global, with momentum across multiple geographies and end-customers. Lokies padlocks are again singled out as a key product supporting higher-margin sales. The company also talks up a “growing pipeline”, more SaaS revenue, and “long-term orders”, which together underpin confidence in “delivering significant shareholder value”.
That language matters. Long-term orders and subscription growth generally improve visibility. For a business of this size, visibility can be the difference between volatile quarters and sustained progress.
Outlook: momentum to carry into 2026, minimal Middle East impact
t42 expects the strong momentum of 2025 to continue in the current year, with “increased levels of commercialisation” as it develops both existing and new client relationships. The company also addresses regional risk directly, saying it foresees minimal impact from the current turmoil in the Middle East, helped by its globally spread customer base and manufacturing locations.
That’s reassuring given the logistics exposure. Of course, it’s a management view, and investors will want to see that borne out in orders and deliveries as the year unfolds.
Why this update matters for investors
Three reasons stand out:
- Turnaround to profit – moving from a $0.9m operating loss to c.$0.4m operating profit is a clear inflection. It suggests cost discipline plus better product mix.
- Margin momentum – gross margin stepping up to c.45% signals both pricing power and cost efficiency. If sustained, it lifts operating leverage on each new sale.
- Recurring revenue mix – a c.10% increase in SaaS revenues improves quality of earnings, smoothing the hardware lumpiness typical in IoT and industrial tech.
The flip side is scale. Even with the jump, revenue is still just over $6.1m, so single contracts or supply chain delays can move the dial materially. Sustaining profitability through the cycle is the next test.
What I like – and what to keep in mind
Positives driving the story
- Clear operational traction: revenue growth across the board and positive EBITDA show the model is working.
- Higher-margin product success: Lokies looks like a real lever for margins and cross-sell opportunities.
- Improving visibility: pipeline conversion, long-term orders and SaaS growth reduce the volatility that dogs many small industrial-tech names.
Balancing risks
- Scale sensitivity: at this size, a slipped shipment or delayed deployment can dent quarterly numbers.
- Unaudited figures: today’s numbers are unaudited; final audited results are due in April 2026 and could bring tweaks.
- Cash and balance sheet: cash position, working capital needs and any debt aren’t disclosed in this update. I’ll look for that in the full results.
What to watch for in the April 2026 audited results
- Cash flow and cash balance – evidence that EBITDA conversion is healthy and the company can self-fund growth.
- Recurring revenue mix – a clearer split of SaaS versus hardware, and the direction of average revenue per user or device (if disclosed).
- Gross margin sustainability – whether c.45% is the new base or reflects specific mix effects in H2.
- Order book and pipeline detail – the size, duration and concentration of long-term orders.
- Lokies traction – deployment volumes, new customer wins, and any geographic highlights.
Bottom line: a credible step towards sustained profitability
This is an encouraging update from t42. Revenue growth, a fatter gross margin, and a shift into operating profit point to a business that’s gaining operational grip. The nod to minimal Middle East impact helps, while the emphasis on SaaS and long-term orders is exactly what shareholders want to hear.
It isn’t mission accomplished yet – scale is still modest and today’s figures are unaudited – but the direction of travel is positive. If April’s results confirm these trends, 2026 could be about building on a profitable base rather than chasing breakeven.
Housekeeping: results timing and AGM
Audited accounts for the year to 31 December 2025 are expected in April 2026, with the AGM notice to follow shortly after.
