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X2M CONNECT LTD (X2M) - IoT Revolution: Transforming Smart Utilities & AI-Driven Data Solutions with X2M Connect

• Andrew Musgrave

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The digital transformation of utilities is no longer a distant future – it's happening right now, and X2M Connect is at the forefront of this revolution. Our conversation with CEO Mohan Jesudason reveals how this Australian technology company has evolved from a patent-based startup to an international player with 80 enterprise customers across Australia, Taiwan, Japan, South Korea, and now the Middle East.

Mohan walks us through X2M's three-phase strategic transformation, culminating in their current shift toward profitability through high-margin SaaS and AI-driven solutions. What sets their platform apart? The ability to connect diverse devices – from water meters to solar panels – onto a single integrated platform, making even "dumb" devices smart in minutes. This technology works across any telecommunications network, functions during power outages, and can be deployed in new markets within days rather than months.


Andrew Musgrave Host

Welcome back to ASX Briefs, your go-to source for insights into Australia's most innovative companies, and today we're excited to have Mohan Jesudason, the CEO of X2M Connect Limited. X2M Connect is an Internet of Things technology company specialising in smart utilities and AI driven data solutions. With a presence across Australia, Japan, South Korea, Taiwan and now expanding into the Middle East and India, X2M is making waves in utility automation, AI and renewable energy management. Mohan, thanks for joining me today and welcome to the ASX briefs podcast.
 
 Mohan Jesudason Guest

Thank you, Andrew, good to talk to you. 

Andrew Musgrave Host

Now Mohan, for listeners that may be unfamiliar with X2M, can you just provide a brief overview of the company? 

Mohan Jesudason Guest

Andrew. X2M is an Australian technology company. We specialise in data collection for artificial intelligence and industrial automation. Our target markets typically are utilities and the renewable energy sector both very large markets and both growing, and both markets that we have a really strong position in. 

Andrew Musgrave Host

And X2M has been undergoing a strategic transformation, shifting focus to SaaS and AI-driven solutions. So, can you walk us through the thought process behind this shift and what it means for your business model? 

Mohan Jesudason Guest

Andrew, like any business, growing a company is a journey. For our company, for X2M, we had a three-stage strategy that we've been executing on. So, stage one was to take a bunch of patents and turn it into a product, build it, commercialise it, validate it and launch it into the market. And the platform we built was an internet-based platform for data aggregation. So that phase is done. 

This, arguably, is the high-risk phase of an organisation, where you don't have any revenues and you're spending capital, and we concluded that phase in about 2020. Yeah, about 2020. Phase two was then taking that product and platform and commercialising it and going on a land grab of enterprise and government customers to build a large base of customers with a large, equally large, addressable market, and then putting yourself in a position where you could harvest them. We've got 80 government and enterprise customers spread across Australia, Taiwan, Japan and South Korea. They've got an addressable market of over half a billion dollars. They're all blue-chip customers and we are in the process of coming out of that phase and moving into what I call the transformation phase. This is the phase where you scale up your business, where you take the business to profitability, one that's delivering cash and, in our case, one that's delivering a substantial block of repeat SaaS-based revenues, and that's what we call the transformation layer, as I said. 

Andrew Musgrave Host

Okay, and the gross margin improved to 47% in the first half of FY25, despite a revenue drop. So how does this reflect on the company's long-term goal of profitability and sustainable revenue generation? 

Mohan Jesudason Guest

Yes. So, this actually goes to the very heart of my previous comments. So aligned with the movement to transformation is our drive to profitability and building a large SaaS business. Because we've got such a large block of established customers with a large addressable market, we can now be more efficient in how we run our business, and we made a decision to exit low-margin hardware-only sales. This created capacity for management, it improved our focus, it reduced our cost base, increased our margins and you also see this coming through in reduction in cash burns. So, at the very heart of our drive to sustainability and profitability was actually exiting low-margin hardware business. We saw the reduction in revenues that will return to growth as we go forward. As you know, when you leave a business, you have a 12-month period where you don't have like-to-like comparisons and as you come out of that you will see the business continue to perform strongly. 

Andrew Musgrave Host

And you recently signed your first commercial contract in the Middle East with Dicode Smart Connect Electronics. So, what excites you most about the Middle Eastern market and how do you see it shaping the company's global presence? 

Mohan Jesudason Guest

Look a whole lot of things, Andrew. The nations that we're targeting are very wealthy nations. They're technologically well advanced, they're highly educated, they're digitizing and governments are mandating this technology in a number of areas. When you get to the UAE itself, they have some 4 million water, electricity, gas meters that are ready to be digitised. That we are targeting. 

Competition is not that great. It's a fragmented market with only a small bunch of small players. We have a very good partner on the ground in Dicode Smart Connect Electronics, and the business itself that we've taken into the UAE is all software-based, it's high-margin business and has very low CapEx requirements from us. So, you know we have a lot to be excited about the UAE and the Middle East market. UAE is our entry point. We see this as being a stepping stone to go into Saudi and Oman and other countries in the region, and you know we're a very conservative company when we move into new markets and we do a lot of work, a lot of DD, before we make a decision to do that. And in fact, the UAE is no exception to that, and we made a great start there. We're already rolling out to commercial contracts in what's been a very short period of time. 

Andrew Musgrave Host

Okay, along with the Middle East, you're also targeting the APAC region and potentially India. So, what are the unique advantages does the platform offer in these high-growth markets? 

Mohan Jesudason Guest

Look, our platform has got four key features that makes it stand out. Firstly, we can connect any device, in our case it's a water, electricity, gas meter, inverter, solar panel onto the one platform and have them talk to each other. You don't see that in the market generally. This means that we can build once and sell many times. So, we've got a much lower capex space, we can deliver better data, we can deliver a broader range of consumer and customer applications and we're really well suited into the AI space. So that's the first big difference the ability to have lots of things on one platform and talk to each other without any human intervention. The second is that we can take dumb devices, dumb meters, and we can make them smart. We can put a little chip into a water meter that can't communicate in two to three minutes and make it communication capable, and then we can go and take control of that meter, we can collect data, and we can do stuff with it. This has given us a first mover advantage in the category. 

The third difference about us is that we can communicate over any telecommunications network 3G, 4G, 5G, ethernet so the customer doesn't have to take a technology bet and we've got a future-proof technology. It also means that we can move into new markets very quickly. You know, it took us less than 10 days to put our technology into the UAE, and speed to market matters, no matter what sort of business you're in. And the fourth difference is that we can keep our smarts centrally in the cloud or at the edge of the cloud. That means we can have a highly scalable platform at a very low-cost structure, and we can continue to operate if powers lost. So, bushfires, cyclones, tsunamis, earthquakes we can continue to operate. And an important part of what we do is public safety, and you can't deliver too much public safety in an earthquake situation. You've got no power. 

Andrew Musgrave Host

And can you now tell us more about your partnership with Greenrock Energy Company in Taiwan and how it positions X2M in the solar energy and battery storage sector? 

Mohan Jesudason Guest

Look, Greenrock's a great company. It's a company that was founded by an entrepreneur and now produces about a gigawatt of renewable energy. It's one of Taiwan's largest renewable energy generation and trading companies. Their footprint is across Taiwan, Japan, Malaysia and the US, so they've got a broad geographic footprint. We've got a strategic partnership with them. They are our battery supplier for smart cities that we're rolling out here in Australia the first two here in Victoria, Echuca and in Yarrawonga and we're their preferred technology partner, and so it's a really good, strong partnership, an important partnership, and Greenrock have now turned around and taken a 10% stake in X2M, and it's always a very good thing if your customer ends up taking equity in you. It's a validation of your technology and what you can contribute to them. 

Andrew Musgrave Host

Okay, and let's discuss the recent launch of “Hive.AI by X2M”, which marks a big step into AI-driven renewable energy optimization. So, what problems does this product solve for renewable energy companies? 

Mohan Jesudason Guest

Look, Hive's a really exciting venture for us. It's the maturity of our company, it's the maturity of our platform and goes to some of the differences I spoke about before, about the ability to have many different devices on the one platform and go out and control it. When you get into the renewable energy space at the risk of being simplistic you grow your performance, you grow your generation, either by adding more footprint, more solar panels or more wind turbines, or improving the productivity of your existing operation. We cater for the latter. We have a sophisticated platform and what Hive does is delivers on that platform a whole range of artificial intelligence applications that helps you improve your performance through revenue generation or through cost improvements. 

Andrew Musgrave Host

Okay, and you've partnered with Sirius Digitech to roll out Hive.AI, so can you elaborate on how this partnership enhances the platform's capabilities? 

Mohan Jesudason Guest

Yes, so Sirius Digitech is UAE-based. It's a sophisticated organisation who are taking to market a range of artificial intelligence applications into a whole right number of sectors, including the renewable energy sector, and we're the company that provides the platform that sucks up data. So, we pull up data from what we call internal sources, like solar panels and battery storage systems, and from external sources, like weather forecasts. We feed that into Sirius as artificial intelligence engines that provide you with forecasts of what demand is going to be like, what production is going to be like, how much to bid for energy in five days' time, in 10 days' time and in 30 days' time. So, what the partnership with Sirius has done is taken a company that's very good at artificial intelligence, taken a company like us that's very good at platform management, and bring them together to create a really powerful offer into the renewable energy sector. 

Andrew Musgrave Host

And X2M now has exceeded 544,000 connected devices. So how does this growth in device connectivity translate into recurring SaaS revenue? 

Mohan Jesudason Guest

Yes, so every device that comes onto our platform has a SaaS revenue stream that attaches to it. So, you get a solar panel or a gas meter onto our platform, we produce data to automate your billing, for example, and that might be for 12 months, five years, eight years or 10 years. So, the more devices you've got, the more revenues we get because of the data we produce. If you want more data so some customers just want data once a month to produce a bill. Some customers want data every 15 minutes. So, the more data you have, the more revenue we get SaaS revenues. So, there's a direct correlation with the number of devices you've got on the platform and the revenues you generate. 

Andrew Musgrave Host

Okay, and just to wrap things up, with your expansion into AI renewables and the Middle Eastern markets, what are some of the biggest revenue growth drivers for the company over the next 12 months and what are some of the key milestones you're looking to achieve? 

Mohan Jesudason Guest

So, look, when you look at revenue drivers, I'd put it into two boxes. One is, as I said, Andrew, at the start. We have a very large existing customer base. They have an addressable market of about $500 million of upfront revenues and a potential of $40 million per annum in recurring revenues, and we're harvesting that base, and, alongside that, we are entering a number of new markets that will take us from where we are to a scaled-up layer, and so they're the two big levers that we're using to grow our revenues. 

The milestones that you should look for and investors should look for in us is, firstly, are we executing? Are we getting more repeat orders from our existing customers? 52% of our revenues come from existing customers. Are we signing up new contracts in new markets? Are we reducing our costs year on year? Our costs are down 30% year on year, and I'll be on a clear path to profitability. So, harvesting our existing customers, moving into new markets, building a stronger business with lower costs, improved cash burn and getting us to as profitability are the key milestones that investors should look for, and you will see that if you look at our last bunch of results, that's exactly what we've been doing. 

Andrew Musgrave Host

Okay, Mohan. Well, it's been great to chat today to get an update on where the company's at, and we look forward to further updates from X2M Connect in the upcoming months. 

Mohan Jesudason Guest

Thanks very much, Andrew. Good luck. 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.