Irisity AB (”Irisity” or ”the Company”) published its Q4 report for 2025 on March 19th, 2026. The following are key events that we have chosen to highlight in the report:
- Net Sales of SEK 18.6m (4.7) – Below our Estimate of SEK 23.0m (-19%)
- Invoicing of SEK 28.4m (38.7), -27% Y-Y – Tough Comparable from Large Q4-24 Projects
- Collections of SEK 33.0m (23.5), +40% Y-Y – Strong Q3-25 Invoicing Converting to Cash
- MRR of SEK 4.4m (4.3) vs. SEK 4.0m in Q3-25 – Continued Sequential Growth from New Customers
- OPEX Declined 34% Y-Y in Q4-25 – Simplification Programme Yielding Results
- EBITDA of SEK -13.3m vs. Estimate of SEK -8.4m, Miss Driven by Revenue; OPEX in Line
- Cash Balance of SEK 3.0m and Available Credit Lines at SEK 9.4m
Revenue Recognition Lag Weighs on Reported Growth – Underlying Commercial Activity Encouraging
Net sales for Q4-25 amounted to SEK 18.6m (4.7), representing a substantial reported Y-Y increase, but below our expectations of SEK 23.0m. However, Analyst Group emphasizes that Q4-24 was negatively impacted by a SEK 13.7m in revenue recognition reversal related to prior periods, meaning the normalized Q4-24 revenue base was approx. SEK 18.4m, making the Y-Y development broadly flat. The Q-Q decline of approx. 24% relative to Q3-25 is therefore the more instructive comparison, reflecting a seasonally softer period compounded by the Company’s deliberate shift toward partner-led and recurring revenue models, under which revenues are realized over the duration of the contract rather than at point of invoicing. Nevertheless, we had anticipated that a larger fraction of the reported Invoicing of approx. SEK 35m in Q3-25 would have translated into revenues. Furthermore, Analyst Group notes that FX headwinds are likely to have dampened reported net sales, although no specific impact is disclosed in the report.
While the lag between invoicing and recognized revenue is an inherent feature of the recurring revenue model, Analyst Group assesses this as a dynamic that will continue to weigh on reported net sales in the near term as the contract mix shifts further toward subscription-based arrangements and away from larger one-off projects. That said, the quarter saw encouraging commercial activity across multiple geographies, including a third consecutive renewal of a U.S. Government agency agreement covering approx. 1,200 AI-enabled camera channels, a new critical infrastructure win in Sweden, a workplace safety deployment in Hungary, and the first phase of a large-scale public safety engagement in Colombia, a city currently operating approx. 2,000 surveillance cameras with plans to expand to more than 6,000. These wins underpin the MRR trajectory and demonstrate that the pipeline remains active.
The gross margin of 80.2% in Q4-25 reflects the high-software composition of the revenue base and compares favorably with the FY 2025 figure of 77.2%.
Invoicing Down on Tough Comparable – Collections Up 40% Y-Y Signalling Healthy Cash Conversion
Invoicing for Q4-25 amounted to SEK 28.4m (38.7), and SEK 29.6m on an FX-adjusted basis, a decline of 27% Y-Y. The primary driver of the decline is the large projects invoiced at the end of 2024, which creates a tougher comparable.
Collections advanced to SEK 33.0m (23.5), an increase of 40% Y-Y, or approx. SEK 35.6m FX-adjusted, confirming that the strong Q3-25 invoicing cycle is converting to cash with limited delay. Collections exceeding invoicing in the quarter contributed positively to working capital dynamics. Analyst Group views the collections trajectory as a meaningful indicator of customer health and the Company’s ability to convert pipeline to cash, a key area to monitor given the relatively tight liquidity position at year-end, with a cash position of approx. SEK 3m.
Steady MRR Progression Reinforces Subscription-Driven Strategy
MRR for Q4-25 reached SEK 4.4m (4.3), compared to SEK 4.0m in Q3-25, equivalent to an increase of 10% Q-Q. Analyst Group views the sequential progression as an encouraging indicator that the pivot toward subscription-based deployment models is translating into tangible, additive recurring revenue, with the commercial wins highlighted above beginning to feed through into the recurring revenue base.
The annualized run rate implied by Q4-25 MRR equates to approx. SEK 52.8m in ARR, representing a substantial proportion of the Company’s total revenue base and underscoring the progress made in the recurring revenue transition. The directional trend is consistent with Analyst Group’s investment thesis, and the phased nature of several recent deployments, most notably the Colombia C5 engagement, which carries expansion potential to more than 6,000 camera channels over three years, suggests that MRR growth could accelerate meaningfully as subsequent phases are activated, making the conversion rate of contracted deployments into live recurring revenue a key variable to monitor.
OPEX Broadly in Line: Simplification Plan Executing, but Full Impact Still Ahead (Q2-26)
Irisity reported other external costs of SEK 7.2m (restated: 44.9m) and personnel costs of SEK 21.0m (25.0m) during Q4-25, both broadly in line with Analyst Group’s estimates. The restated Q4-24 other external costs was inflated by approx. SEK 26.9m in bad debt provisions and rights issue costs, excluding those items the costs would have amounted to approx. SEK 18m in Q4-24. Thus, the underlying decline Y-Y amounts to approx. 60% Y-Y, reflecting genuine structural improvement from the simplification programme. Personnel costs declined 16% Y-Y and 6% Q-Q, consistent with the reduction in headcount from 76 to 57 FTEs and consultants from 16 to 15. Adjusting for the one-off charges in Q4-24, adj. OPEX declined 34% Y-Y in Q4-25, a clear indication that the streamlining initiatives are materializing in the cost base.
On an adjusted EBITDA basis, excluding work performed for own account, other operating income and costs, Q4-25 came in at SEK -13.3m against an Analyst Group estimate of SEK -8.4m. The deviation is predominantly attributable to weaker-than-expected revenue and gross margin rather than cost overruns, suggesting the cost structure is broadly tracking to plan. The simplification programme is expected to reduce OPEX by 30% relative to Q2-25 levels, with the full income statement impact becoming visible from Q2-26. While Analyst Group assesses that the Company has executed well on the streamlining initiatives, as evidenced by the continued reduction in the OPEX base, the full benefit of the executed measures has yet to fully materialize in the P&L. Going forward, Analyst Group will monitor both the pace of remaining cost reductions and, more critically, whether revenue growth is converging at the rate required to reach cash flow neutrality in 2026.
Tightening Liquidity and Significant Restatements Introduce Complexity into the Investment Case
The cash position at the end of Q4-25 amounted to SEK 3.0m and coupled with the remaining available credit line of SEK 9.4m, total available liquidity amounted to SEK 12.4m at year-end. The rights issue of approx. SEK 26.1m gross provided net cash proceeds of approx. SEK 9.4m after set-offs of SEK 16.2m against the Stockhorn Capital AB loans and transaction costs of approx. SEK 0.5m. The OCF for the fourth quarter amounted to SEK -0.5m, positively impacted by WC changes of SEK 9.1m, driven by seasonally strong collections in Q4-25 following the high invoicing activity in H2-25. Analyst Group notes that this dynamic is likely to partially reverse in Q1-26, putting renewed pressure on working capital.
Analyst Group views liquidity as a key area to monitor, as the relatively tight financial position risks diverting management focus away from growth-driving initiatives at a critical point in the Company’s transition. The solid invoicing of SEK 28.4m in Q4-25, combined with further cost reductions expected to materialize in H1-26, should contribute to a lower burn rate, though the tight liquidity position remains a substantial risk to monitor.
The report also discloses a set of prior-period restatements with a cumulative net reduction of SEK 77.9m in group equity, relating to adjustments in revenue recognition, goodwill amortization, and foreign exchange translation across earlier periods. While these have been transparently addressed and align the accounts with current standards, Analyst Group notes that they may affect comparability with previously reported figures, particularly when assessing historical trends.
Concluding Remarks About the Report
In summary, Analyst Group views Q4-25 as a quarter that marks the completion of a significant transformation, with Irisity entering 2026 as a leaner and more focused organization. With adj. OPEX down 34% Y-Y in Q4-25 and continued sequential MRR growth to SEK 4.4m, the strategic repositioning is yielding tangible results. The revenue outcome of SEK 18.6m fell short of Analyst Group’s estimate of SEK 23.0m, though the miss is best understood as a consequence of the deliberate shift away from larger one-off projects toward subscription-based recurring revenue, a transition that compresses near-term recognized revenue while building a more durable long-term revenue base. The key variables going forward are whether the remaining cost reductions materialize in the P&L as expected in Q2-26, and whether the commercial momentum across the U.S., Sweden, Colombia, and Hungary translates into accelerating MRR and invoicing in H1-26. With total available liquidity of SEK 12.4m and a cash position of SEK 3.0m, the financial position leaves limited room for execution delays, and liquidity remains a key area to monitor on the path toward cash flow neutrality in 2026.
We will return with an updated equity research report of Irisity.
