Irisity

Irisity AB (”Irisity” or ”the Company”) published its Q2 report for 2026 on August 27^th, 2026. The following are key events that we have chosen to highlight in the report:

• Net Sales of SEK 27.3m (17.9), +52% Y-Y – Well Above Estimate of SEK 21.9m
• Invoicing of SEK 28.7m (21.2), +36% Y-Y; Collections of SEK 33.0m (19.8), +67% Y-Y
• MRR of SEK 4.5m (3.7), +22% Y-Y – SEK 4.8m FX-Adjusted, +30% Y-Y
• OPEX of SEK 25.3m (33.7), -25% Y-Y – Simplification Programme Bearing Fruit
• EBITDA of SEK -1.7m vs. Estimate of SEK -5.9m – Reported EBITDA and OCF Turn Positive
• Available Liquidity of SEK 5.6m (8.8) at the end of Q2, approx. SEK 10.6m After the Enlarged Stockhorn Facility

Net Sales Rebound Sharply and Beat Estimate as Invoicing Converts to Revenue

Net sales for Q2-26 amounted to SEK 27.3m (17.9), an increase of 52% Y-Y and 42% sequentially, and approx. 25% above Analyst Group’s estimate of SEK 21.9m. The strong growth was driven by broad-based commercial momentum in the partner-led model, with growth concentrated in the USA & Canada and South America. On-premise deployments remained the dominant revenue driver, while cloud represents an incremental opportunity yet to be tapped at scale.

The outperformance versus our estimates reflects a higher-than-anticipated share of the invoiced volume converting into recognized revenue within the quarter, coupled with solid inflow of new deals. Importantly, the strength was broad-based rather than reliant on a single large deal, spanning enterprise, partner and OEM channels, which Analyst Group assesses as evidence of durable commercial execution rather than one-off timing.

Invoicing and Collections Accelerate, Underpinning Revenue Visibility and Cash Conversion

Invoicing amounted to SEK 28.7m (21.2), up 36% Y-Y and 29% sequentially, while collections rose to SEK 33.0m (19.8), up 67% Y-Y and 50% Q-Q. On an LTM basis, invoicing climbed to approx. SEK 114m, running well ahead of the approx. SEK 90m of LTM net sales. As invoiced amounts are recognized as revenue over the duration of the underlying contracts rather than upfront, invoicing running at approx. 1.3x reported sales points to a layer of contracted volume not yet reflected in the top line, underpinning revenue visibility into the coming quarters and boding well for continued top-line growth.

The strong invoicing partly reflects the contract for 1,000 IRIS+ Enterprise AI licenses at a major U.S. airport, with an order value of approx. USD 1.0m, awarded during the second quarter. Its hybrid construct, an up-front license plus a committed multi-year SUP, supports both near-term invoicing and an incremental recurring revenue layer from H2-26. Beyond this single engagement, the quarter’s commercial momentum was encouragingly broad-based across regions and verticals, spanning the first phase of an AI video analytics deployment for a leading international precious metals company via a European partner, a renewed one-year agreement with Stockholm Metro, and a new OEM collaboration embedding Irisity’s forensic-first analytics into an established security provider’s platform.

The strong growth in collections is an equally important KPI to monitor, as it captures the pace at which invoiced business converts into cash. Collections of SEK 33.0m exceeded invoicing in the quarter, indicating that the elevated H1 invoicing is being collected with limited delay, a tangible result of the improved quote-to-cash cycle, in which the partner-first model and the shift to monthly invoicing have shortened the lag between billing and payment. Analyst Group views healthy cash conversion, together with the collections trajectory as an indicator of customer health, as especially valuable given the constrained liquidity position, since it directly reduces the Company’s reliance on external funding.

FX-Adjusted MRR Reaches SEK 4.8m, Deepening the Recurring Revenue Base

MRR amounted to SEK 4.5m in Q2-26 (3.7), up 22% Y-Y, while at constant currency MRR reached SEK 4.8m, an increase of 30% Y-Y. The reading marks continued sequential progression from SEK 4.4m in Q1-26 and confirms that the pivot toward subscription-based deployment models keeps adding to the recurring revenue base, notwithstanding adverse FX effects from a stronger SEK against the USD that dampened the reported figure.

The annualized run rate implied by Q2-26 MRR of SEK 4.5m equates to approx. SEK 54m in ARR, or approx. SEK 58m at constant currency. At this level, recurring revenue accounts for a substantial share of the Company’s total revenue base, providing a foundation of predictable, high-margin income that underpins the scalability of the business model.

Operating Leverage Emerges as a Leaner Cost Base Meets 52% Sales Growth

The gross margin expanded to 86.3% (78.8) in Q2-26, above Analyst Group’s estimate of 81.5%, primarily reflecting a higher share of recurring revenue in the mix alongside continued efficiencies on hosting services. Adj. OPEX (excluding COGS and D&A) came in at SEK 25.3m (33.7), a reduction of 25% Y-Y and further proof that the simplification programme is bearing fruit in the P&L. Personnel costs declined 28% Y-Y to SEK 18.0m (25.1), consistent with a workforce of 53 FTEs at quarter-end (73) and 14 consultants (17), while other external charges fell 15% Y-Y to SEK 7.3m (8.5).

While adj. OPEX landed somewhat above Analyst Group’s estimate of SEK 23.7m, which had assumed the full 30% Y-Y reduction management initially guided toward, the modest overshoot carries little weight against net sales growing more than 50% Y-Y during the quarter. The deviation is, moreover, of high quality, partly stemming from higher sales commission on the strong invoicing and collections performance, and restating for this the underlying Y-Y reduction amounts to 25.8%, while the run rate excluding commission declined a further 3% Q-Q. Analyst Group thus views the elevated commission as success-linked spend rather than cost slippage, a direct function of the commercial momentum that, given the high incremental margin on the associated revenue, is comfortably self-funding. With management reaffirming its commitment to the 30% target and further cost reductions expected to reach the P&L in the coming quarters, Analyst Group sees the remaining gap on the structural cost base as a matter of timing rather than execution.

The combination of strong revenue, the elevated gross margin and the lower cost base lifted adj. EBITDA, excluding work performed for own account, other operating income and costs, to SEK -1.7m from approx. SEK -19.5m in Q2-25, and approx. SEK 4.1m ahead of Analyst Group’s estimate of SEK -5.9m. On a reported basis, EBITDA turned positive at SEK 1.6m (-12.0), despite a lower contribution from capitalized work performed for own account of SEK 3.1m (6.2). Analyst Group considers the quarter a meaningful step toward the Company’s objective of sustained positive adjusted EBITDA, demonstrating the operating leverage in the business model now that the cost base is aligned to the size of the business, and views the path to durable break-even as now hinging primarily on sustaining the top-line momentum.

Positive Operating Cash Flow a First, but Liquidity Remains the Key Area to Monitor

The second quarter marked a notable inflection in cash generation, with operating cash flow turning positive at SEK 1.5m (-7.4). The improvement stemmed from the sharply reduced operating loss rather than from working-capital effects, as cash generated from operations before working-capital movements swung to SEK 2.4m (-13.7), with the working-capital contribution broadly neutral in the quarter (approx. SEK -0.9m). Investing activities of SEK -4.5m (-4.5), mainly capitalized product development, left free cash flow at approx. SEK -2.9m during Q2-26, a substantial improvement from approx. SEK -11.9m in Q2-25.

The cash position stood at SEK 3.4m at quarter-end (6.5), with total available liquidity of SEK 5.6m (8.8) including approx. SEK 2.2m of remaining headroom on the SEK 20m overdraft facility. Net debt amounted to SEK 27.5m (14.1) and solidity was 64.8% (77.3). After quarter-end, Irisity increased the Company’s facility with largest shareholder Stockhorn Capital AB, raising the limit from up to SEK 5m to up to SEK 10m on otherwise unchanged terms (STIBOR 3M plus 4 percentage points). The additional approx. SEK 5m of headroom lifts total available liquidity to approx. SEK 10.6m on a pro-forma post-period basis.

Analyst Group continues to view liquidity as a principal area to monitor. While the positive operating cash flow and enlarged facility ease near-term pressure, the buffer remains thin. Hence, Analyst Group cannot rule out that further bridge measures may be required before durable cash flow neutrality, though the Q2-26 cash generation, if sustained through H2-26, would materially de-risk that trajectory.

Concluding Remarks About the Report

In summary, Analyst Group views Q2-26 as the strongest quarter since the transformation began and a clear validation of the past year’s operational progress. Net sales rebounded 52% Y-Y to SEK 27.3m, approx. 25% above estimate, while the simplification programme brought adj. OPEX down 25% Y-Y to SEK 25.3m. Together these lifted adj. EBITDA to SEK -1.7m, approx. SEK 4.1m ahead of estimate, and turned both reported EBITDA (SEK 1.6m) and operating cash flow (SEK 1.5m) positive, a tangible sign of the operating leverage embedded in the model. Invoicing of SEK 28.7m and collections of SEK 33.0m, up 36% and 67% Y-Y, alongside FX-adjusted MRR of SEK 4.8m, confirm that the partner-first model is converting into both cash and recurring revenue. With LTM invoicing of approx. SEK 114m running well ahead of the approx. SEK 90m of LTM net sales, revenue visibility into the coming quarters looks well supported. Liquidity remains the principal risk to monitor, with available liquidity of SEK 5.6m at quarter-end rising to approx. SEK 10.6m on a pro-forma basis following the increased Stockhorn facility. Even so, the financial position remains under pressure, and the durability of the Q2-26 cash inflection through H2-26 will determine the pace toward cash flow neutrality. Overall, the quarter strengthens the investment thesis and shifts the focus, as previously flagged, from cost execution, now largely delivered, to sustaining top-line growth.

We will return with an updated equity research report of Irisity, where we expect to make upward adjustments to both our growth and profitability estimates.