Xtract One Technologies TSE: XTRA reported record fiscal 2026 revenue as demand grew for its security-screening products across education, healthcare, commercial and entertainment markets, while operating expenses rose at a slower rate than sales.
For the year, revenue increased 108% to C$28.8 million from C$13.9 million in fiscal 2025. Fourth-quarter revenue rose 144% to C$8.2 million from C$3.3 million a year earlier. CEO Peter Evans said the company’s results reflected the rollout of its Xtract One Gateway product alongside continued growth in its SmartGateway platform.
Adjusted EBITDA improved to a loss of C$3.5 million for fiscal 2026, compared with a C$8.6 million loss in the prior year. Net loss narrowed to C$7 million from C$11.9 million. CFO Karen Hersh said the company increased operating expenses by 13% to C$24 million while revenue more than doubled.
“Revenue grew by C$14.9 million this year, while operating expenses only grew by C$2.8 million,” Hersh said, adding that approximately one-third of each incremental revenue dollar reached adjusted EBITDA.
Gateway rollout drives growth
Evans said Xtract One Gateway, designed for settings in which visitors commonly carry backpacks, laptops and other personal items, accounted for more than one-third of fiscal-year revenue and roughly half of bookings in its first full commercial year. The product is being deployed by school districts and schools in five U.S. states, he said.
The company’s SmartGateway system, which is intended for venues where people carry fewer items and where screening for smaller blades and firearms is a priority, recorded sales growth in healthcare and entertainment. Evans said hospitals in Canada and the U.S. selected the product in part because it can identify small blades without alerting on every phone or purse and can fit in small emergency-department vestibules.
He also cited healthcare demand in California ahead of the state’s March 2027 weapon-screening requirement under Assembly Bill 2975. Evans said Xtract One is seeing interest from other states considering similar legislation.
Among entertainment wins, Evans said the British Museum selected SmartGateway systems for every entrance following on-site testing. The company also added an unnamed major international entertainment venue, where it completed installation of a previously announced US$2.6 million SmartGateway expansion during the fourth quarter.
Commercial bookings and backlog
Commercial and manufacturing customers represented about one-quarter of fiscal 2026 bookings according to Evans, while Hersh said the segment accounted for 37% of total bookings. The company cited deployments in pharmaceutical manufacturing facilities across California, Arizona and Ohio, as well as installations or expansions involving insurance, healthcare, data-center, technology and airline customers. The Metro Toronto Convention Centre selected Xtract One Gateway for its screening requirements.
Total contract value of new bookings was C$32.2 million for fiscal 2026, down from C$38.5 million in fiscal 2025. Hersh noted that the prior-year figure included a C$16.1 million fourth-quarter booking period that included the first wave of Xtract One Gateway orders and several large education awards. Fourth-quarter bookings were C$6 million.
Management said bookings can fluctuate based on customer buying cycles and timing, particularly as average contract sizes increase and deployments occur across multiple phases.
- Contractual backlog rose 66% to C$25.6 million at fiscal year-end.
- Of that amount, C$10.5 million is scheduled to be recognized as revenue over the next 12 months.
- Signed agreements pending installation declined to C$18.4 million from C$34 million a year earlier as manufacturing improvements enabled faster deployments.
Evans told analysts that the qualified opportunity pipeline was approximately US$122 million and was diversified across market segments. He said the company had not seen changes in win rates or sales-cycle length, describing quarterly variability as “lumpiness.” He also said international opportunities were growing, particularly outside North America.
Margins, cash and fiscal 2027 priorities
Gross margin was 57% in the fourth quarter, down from 71% a year earlier, while full-year gross margin declined to 58% from 66%. Hersh attributed the decrease partly to product mix and the earlier production stage of Xtract One Gateway. She said SmartGateway has a more mature margin profile, while management expects the margin gap between the products to narrow over time as it refines the newer product’s bill of materials, installation and service processes.
Fiscal-year selling and marketing expense increased 31% to C$8.2 million as the company invested in business development, while general and administrative expense rose 13% to C$8.6 million. Research and development expense was flat year over year at C$7 million.
Xtract One ended the year with C$17.3 million in cash and cash equivalents, up from C$8.2 million a year earlier. Operating cash use for the year declined to C$3.5 million from C$6.5 million. The company generated approximately C$1.9 million in fourth-quarter operating cash flow, including working capital, and said the quarter was within C$0.5 million of operating cash breakeven excluding working capital.
For fiscal 2027, Evans said the company will prioritize sales expansion in education, healthcare, commercial and international markets; customer-driven research and development; maintaining operating-cost growth below revenue growth; and building customer advocacy. Hersh said there were no planned investments requiring a significant step-up in operating expenses, though the company expects to continue investing in sales, marketing and research and development.
About Xtract One Technologies (TSE:XTRA)
Xtract One Technologies is a leading technology-driven provider of threat detection and security solutions leveraging AI to deliver seamless and secure experiences. The Company makes unobtrusive weapons and threat detection systems that are designed to assist facility operators in prioritizing- and delivering improved 'Walk-right-In' experiences while enhancing safety. Xtract One's innovative portfolio of AI-powered Gateway solutions excels at allowing facilities to discreetly screen and identify weapons and other threats at points of entry and exit without disrupting the flow of traffic.
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