t42 IoT Tracking Solutions Reports Strong H1 2025 Growth, Improved EBITDA, and Major $2.5M Contract

t42’s H1 2025: revenue up, margins fatter, and a cash-friendly $2.5 million deal

t42 IoT Tracking Solutions has posted a tidy set of unaudited interim numbers for the six months to 30 June 2025. The headline story is simple: revenue is growing, gross margins are improving, and adjusted EBITDA has flipped positive. There is also a sizeable post-period contract that pays upfront – exactly what you want to see in a hardware-plus-SaaS business.

Key numbers investors should know

Metric	H1 2025	H1 2024
Revenue	$2.293 million	$2.039 million
Gross margin	48%	45%
Adjusted EBITDA	$239,000	$(25,000)
Operating loss	$(197,000)	$(280,000)
Total comprehensive loss	$(891,000)	$(1.379 million)
Cash at period end	$207,000	$135,000
Working capital deficit	$4.5 million	not disclosed here

Adjusted EBITDA is a profit measure before interest, tax, depreciation and amortisation. It is commonly used to show underlying operating performance.

Sales momentum and why Lokies matters

Management says it is on track for at least 200% year-over-year growth in Lokies revenues in 2025. Concrete evidence backs that up: 5,000 Lokies units sold in H1 2025 versus 1,800 in H1 2024. Hardware sales today plant the seeds for higher-margin software tomorrow, because each deployed device drives ongoing SaaS subscriptions.

That mix shift is already visible. Segment disclosure shows H1 2025 revenue of $1.321 million from Hardware and $972,000 from SaaS. Gross profit tells the story even more clearly – Hardware delivered $250,000, while SaaS delivered $842,000. In short, SaaS is doing the heavy lifting on margin.

Gross margin is moving the right way

Gross margin improved to 48% in H1 2025, up from 45% in H1 2024 and 38% for FY 2024. Management attributes this to a production cost reduction programme and targets a further lift to 55% in H2 2025. If delivered, that would be a meaningful tailwind to profitability.

One blemish to note: a $149,000 inventory write-off was booked in the period, recognised in other expenses. It is not unusual during cost and product transitions, but it is still cash that has left the building.

Big news after period end: a $2.5 million contract paid in advance

On 12 August 2025, t42 signed a contract for orders valued at in excess of $2.5 million. Some revenue will land in 2025, with the majority in 2026. Crucially, all purchases under the contract are paid in advance. That is excellent for cash flow and reduces execution risk.

Debt extensions buy time – with strings attached

Two secured convertible loan notes (CLNs) have been pushed out to the end of 2027, improving financial flexibility:

• £0.925 million CLN – now due end-2027, repaid via monthly capital and interest instalments. As at June, the principal plus capitalised interest on a related facility was $1,476,896, to be repaid in 30 unequal monthly payments of $20,000-$75,000 starting July 2025. Around $0.4 million falls due in the coming year and $0.7 million the year after.
• $1.35 million CLN – now due end-2027, interest-only. A separate note shows a $1.3 million balance as of 30 June 2025.

There are tighter protections for lenders. If t42 misses two consecutive repayments on the instalment plan, lenders are entitled to 60% of Helios SaaS sales revenue until repayments resume. There is also a second-ranking fixed charge over the Helios division. The company may negotiate a sale of Helios if proceeds fully repay outstanding principal and interest.

Translation: the runway is longer, but hitting those monthly payments matters. On the positive side, management says one of the loans is already being repaid in instalments.

Balance sheet reality check and going concern

The independent auditor highlighted the group’s financial position. As of 30 June 2025, t42 had a capital deficit of $3.3 million and a working capital deficit of $4.5 million, alongside an operating loss and negative operating cash flow of $0.12 million in the period. Cash stood at $207,000.

Management has prepared cash flow forecasts and believes the group can meet obligations based on production efficiencies, customer purchase agreements and the loan extensions. That is reassuring, but investors should recognise the tight liquidity. The advance payments on the new $2.5 million contract are particularly important in this context.

Equity, warrants and potential dilution

On 17 February 2025, the company raised £262,500 gross (approximately £253,375 net) by issuing 10,500,000 shares plus 10,500,000 warrants exercisable at £0.05 for three years. Shares in issue were 65,626,357 at 30 June 2025.

There are 18,045,306 options and warrants outstanding at a weighted average exercise price of £0.098. In addition, the two CLNs are convertible into up to 117.1 million shares as at 30 June 2025. That is a significant source of potential dilution if converted.

Commercial progress across regions

• Ecuador – integration has been completed and initial vehicles are connected. Management expects deployments to increase in H2.
• Mexico – roughly half of the contract has been executed, with the remainder currently on hold. No timeline disclosed.

Product pipeline is getting broader

• Kylos M – compact tracking for boxes, pallets and trailers. Pilot completed and now available for commercial sales with strong demand.
• Kylos Solar – permanent installation for rail freight and containers with self-sustaining power. In pilots with several customers and expected to receive commercial approval shortly.
• Kylos Label – single-use tracker for one-way shipments. Development ongoing with expected portfolio inclusion in Q4 2025.
• New solution in development for managing access to gas storage facilities, including alerts for irregular activity.

More products broaden the addressable market and deepen the SaaS opportunity. They also help diversify away from any single device line.

Profit and loss walk-through

Revenue increased to $2.293 million. Cost of revenues was $1.201 million, producing gross profit of $1.092 million. Operating expenses totalled $1.289 million, leaving an operating loss of $197,000. Net finance expenses of $694,000 – driven by exchange differences and loan interest – widened the bottom-line loss to $891,000.

The cash flow statement shows negative operating cash flow of $115,000. Financing inflows of $176,000 largely reflect the equity raise, offset by loan and lease payments.

Legal note

On 12 August 2025, a former employee filed a claim in Israel alleging bodily injury in October 2018, estimating damages of 400 thousand Israeli shekels plus general damages. t42’s employer liability insurer has assumed conduct of the defence while reviewing coverage. The company’s legal advisers cannot yet assess the likelihood of success.

My take – the good, the not-so-good, and what to watch next

• Positives: revenue up, SaaS-driven margin improvement, adjusted EBITDA in the black, and a hefty post-period contract with advance payments. The CLN extensions reduce near-term refinancing risk, and product momentum is clear.
• Negatives: liquidity is tight with $207,000 cash and a $4.5 million working capital deficit. Finance costs and FX remain a drag. The CLNs and 18.0 million options and warrants point to material potential dilution. Mexico’s pause clouds near-term revenue visibility.
• Watch for: delivery against the 55% gross margin target in H2, cash inflows from the $2.5 million contract, sustained Lokies sales to lock in recurring SaaS, execution of Ecuador roll-out, and disciplined adherence to the monthly CLN repayments to avoid the Helios revenue sweep.

Overall, H1 2025 shows a business moving in the right direction on sales, margins and profitability measures, albeit from a constrained balance sheet. If t42 converts its sales pipeline and keeps costs tight, the operational progress could start to outpace the financing noise. Execution in H2 will be the proof point.