Xtract One Applied sciences: that is simply the “tip of the iceberg,” analyst says

Ventum Capital Markets analyst Amr Ezzat reaffirmed his “Purchase” score and $1.15 goal worth on Xtract One Applied sciences (Xtract One Applied sciences Inventory Quote, Chart, Information, Analysts, Financials TSX:XTRA) in an Oct. 24 report, saying that document bookings, accelerating deployments, and stable margins place the Toronto-based threat-detection firm for a stronger second half of fiscal 2026.

“Following our First Look final evening, we emphasised that the near-term noise in income mattered far lower than the visibility embedded in document bookings and backlog—and the decision bolstered that view,” Ezzat mentioned. “Administration struck a assured tone, noting that deployment friction is easing and set up momentum is bettering into FQ2, organising a stronger second half as volumes ramp. Margins stay structurally stable, with near-term compression considered as transitional.”

Xtract One, previously Patriot One Applied sciences, develops AI-powered weapon and menace detection programs for stadiums, colleges, casinos, places of work, and healthcare services throughout North America and overseas. Based in 2016, the corporate’s SmartGateway and One Gateway merchandise use sensor and analytics know-how to detect hid weapons and threats with out intrusive screening.

Ezzat mentioned the corporate’s development engine continues to “evolve as meant—bookings changing into deployments, deployments into income, and income into earnings leverage.” The brand new One Gateway product has exceeded inside expectations, prompting administration to double manufacturing capability to satisfy demand, whereas the certified gross sales pipeline now exceeds US$100-million throughout each gateway platforms.

Ezzat mentioned backlog conversion seems to be accelerating, with administration anticipating “the true ramp” in H2/F26. Whereas some deployments have been delayed by customer-side elements comparable to reorganizations and building, “not one of the signed offers have been misplaced,” he famous.

Gross margin within the fiscal fourth quarter was 71.2%, nicely above Ventum’s 60% forecast and up from 57% final quarter, aided by pricing power and manufacturing efficiencies in SmartGateway manufacturing. Administration guided to a short lived dip in early F2026 as new One Gateway set up prices movement by, earlier than margins normalize with scale.

Training accounted for 60% of This fall bookings (US$16.1-million, up 250% quarter over quarter), with 24% from leisure and 12% from healthcare, a mixture that contributed to a better proportion of upfront contracts as faculty boards usually pay by grants and annual budgets.

“That is the tip of the iceberg,” Ezzat mentioned, including that weekly demos and repeat orders from early schooling clients point out robust adoption.

Income for the quarter got here in at $3.3-million (Ventum: $2.9-million), down 3.4% sequentially and 40.6% yr over yr, reflecting the timing of deployments. Bookings reached a document $16.1-million, whereas mixed backlog and signed contracts pending set up hit $49.7-million, up 85% yr over yr.

Adjusted EBITDA was –$2.7-million (according to expectations) versus –$2.3-million in Q3 and –$1.4-million final yr. Free money movement was –$1.0-million, an enchancment from –$3.5-million within the prior quarter, and the corporate ended the interval with $8.2-million in money and no debt, up sharply from $1.9-million.

Ezzat launched quarterly forecasts for fiscal 2026, anticipating income and margin contributions to be weighted towards the second half as One Gateway deployments scale and gross margins normalize. His full-year forecasts stay unchanged.

He tasks Adjusted EBITDA of $1.7-million on income of $29.8-million in fiscal 2026, bettering to $7.8-million on $43.5-million in fiscal 2027.

“The story continues to play out as anticipated,” Ezzat concluded. “With deployments ramping, margins increasing, and a quickly rising gross sales pipeline, execution, not demand, is now the gating issue.”

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