Our Interim CEO, Gustav Zaar, in Conversation with Analyst Group

In this interview, Gustav Zaar shares insights into Irisity’s ongoing transformation journey and strategic priorities for the coming years.

He discusses how we’re enhancing operational efficiency, empowering our global partner network, and accelerating the shift toward recurring revenues through our SaaS and edge-based solutions.

With a streamlined organization, strong customer retention, and increasing momentum across key markets, Irisity is laying the groundwork for a more focused, innovative, and financially robust future.

Read the full interview here

Gustav Zaar

“The cost-saving program is expected to reduce OPEX by 30% compared to Q2-25 levels, equal to SEK 40m in annualized savings. Initial effects are already visible in H2-25, with the full impact realized during 2026. This will bring operating expenses in line with current sales volumes and represents a critical step towards achieving cash flow break-even.”

For those unfamiliar with Irisity, could you give a brief overview of your business and explain both the main challenges in recent years and how the company is positioned to move forward?

Irisity develops AI-driven video analytics software that turns ordinary cameras into intelligent real-time detection systems. The AI delivers precise threat detection, while dramatically reducing false alarms, and operational cost unlocking new recurring revenue streams for security partners.

In recent years we have faced challenges such as long sales cycles, high customer acquisition costs, and an overextended R&D footprint. These challenges were compounded by geopolitical tensions, a weaker USD, and delays in large international projects, which together affected reported revenues in 2024 and 2025.

We’re responding by simplifying: focusing on fewer geographies and key customer segments such as AI Products and AI SaaS, which are characterized by shorter sales cycles and faster conversion rates. In parallel, we are consolidating R&D in Gothenburg and Budapest, while pursuing a partner-led sales model with greater emphasis on recurring revenue. These initiatives are already underway, supported by a cost-saving program progressing through H2-25, with SEK 40m in annualized savings to be realized in 2026.

You recently stepped in as interim CEO after serving as CFO since H1-25. What experiences from your background are most relevant in leading Irisity through this restructuring phase?

Following the board’s decision in September 2025, I stepped in as interim CEO after serving as CFO since H1-25. My background includes over 17 years in finance leadership, with a strong focus on restructuring, cash flow control, and cost optimization. This experience is directly relevant in guiding Irisity through its current transformation.

The change in leadership does not signal a change in strategy. The board has emphasized that we are executing the same streamlining plan, but at the next level of simplification and focus. Continuity is important, and the search for a permanent CEO is underway to ensure the right long-term leadership. At the same time, I am supported by a strong leadership team with deep industry knowledge, expertise in technology, products, sales, operations, governance, and partnerships.

The restructuring program targets SEK 40m in annual savings through R&D consolidation, streamlined sales, ARR growth, and reduced reliance on large one-time software projects. Could you provide concrete examples of progress made in each area and the timeline for when investors should expect visible impact in the P&L?

We are making progress in each of the main areas:

• R&D consolidation:

The Tel Aviv operations are being consolidated into Gothenburg, while Budapest will continue its focus on embedded edge AI aimed at the mid-market partner driven segment. Leadership changes, including the appointment of a new Group CTO, are streamlining decision-making and reducing costs. The first phase has been executed as communicated, with full execution by Q1-26.

• Streamlining the go-to-market strategy:

We have reduced management layers while strengthening our partner-first approach, exploring white-label and OEM opportunities, and further our strategic alliances with major VMS (Video Management System) platforms to increase reach without adding heavy direct sales costs. In parallel, we are building a structured partner enablement program and a mid-market product to accelerate deployments, while reducing reliance on large one-time projects with long sales cycles in order to improve CAC efficiency.

• Recurring revenues:

We are placing greater emphasis on SaaS and Security-as-a-Service. While MRR temporarily declined in Q2 2025 due to FX headwinds and renewal delays, our robust cloud platform, together with regulatory tailwinds from revised camera permit requirements in Sweden during Q2, is expected to support ARR growth in H2 2025 and into 2026. A concrete example is the recent contract expansion with a U.S. federal government agency, marking the fourth consecutive year of recurring ARR with that customer.

To summarize, the cost-saving program is expected to reduce OPEX by 30% compared to Q2-25 levels, equal to SEK 40m in annualized savings. Initial effects are already visible in H2-25, with the full impact realized during 2026. This will bring operating expenses in line with current sales volumes and represents a critical step towards achieving cash flow break-even.

Revenues have declined in 2024–2025 despite a fast-growing AI video surveillance market. What are the main reasons Irisity hasn’t been able to capture this growth yet, and what specifically will change going forward?

Despite anticipated strong growth in the global AI surveillance market, Irisity has not captured this momentum mainly due to execution delays in larger international projects, extended quote-to-cash cycles, and FX headwinds from a weaker USD. Reported net sales in Q4-24 were further impacted by revised revenue recognition, as delayed projects and postponed payments led to a SEK 13.7m reversal. Adjusted for this, net sales would have been SEK 18.4m in Q4-24 and SEK 102m for FY 2024, versus the reported SEK 4.7m and SEK 88.4m.

Going forward, we are streamlining operations to better leverage our scalable business model. This includes prioritizing target customer segments more strictly, focusing on faster-to-market product categories, and increasing the share of recurring SaaS revenues through a partner-driven sales model. In parallel, we are expanding into mid-market channels and central monitoring stations, where our technology addresses specific pain points such as false alarm filtering. These measures reduce sales complexity, accelerate time-to-market, and allow us to capitalize on our existing platform — driving shorter sales cycles, greater scalability, and a more predictable revenue base.

You plan a SEK 25m fully guaranteed rights issue. How exactly will the proceeds be allocated, and in combination with cost cuts, will this be sufficient to reach cash flow break-even without requiring additional dilution?

We are preparing a planned rights issue of approximately SEK 25 million to support our strategy of leaner product development and to accelerate sales. A portion of the proceeds is also intended to be used to offset short-term loans provided by Stockhorn Capital, which have been critical in securing liquidity ahead of the issue.

Combined with the expected SEK 40 million in annual cost reductions from the streamlining program, this financing is expected to provide sufficient runway to execute the plan and reach cash flow break-even in 2026. While additional capital cannot be entirely ruled out, the combination of the rights issue and cost savings significantly lowers financial risk. Our largest shareholder has also expressed its intention to fully guarantee the entire rights issue at no cost for the company, which further underscores strong confidence in the company’s turnaround.

With ongoing initiatives to streamline the organization and drive growth, clear and transparent communication with the market is key to maintaining investor confidence. How are you working to strengthen your IR and overall communication strategy going forward?

Our external communication has historically been centered around MAR-related disclosures. Going forward, we are committed to improving transparency by also highlighting product developments, customer projects, and operational progress. The ambition is to provide investors with a more continuous flow of relevant information that better reflects the company’s day-to-day progress, in addition to regulatory updates. We have already begun executing on this strategy — in September we announced several contract wins along with progress in the R&D consolidation — and this more balanced approach will continue going forward.

Could you share more about your current sales pipeline, recent contract momentum, and how visibility looks for the coming quarters?

Our sales pipeline remains solid, with healthy activity across services, solutions, and products, with a strong focus on our partner-driven activities. With a solid installed base and high renewal rates, in combination with customer expansions and new customers coming in, we have a positive outlook.

In recent months, we secured a contract expansion with a U.S. federal government agency for a fifth site deployment, marking the fourth consecutive year of recurring ARR with that customer. We were also awarded a major transportation project expansion in New York alongside a three-year software support extension, and Iris+ Software was selected for a C5i 911 Centre in a central Mexican state.

These wins illustrate how existing customers are expanding their deployments and committing to long-term agreements, which strengthens revenue visibility alongside new customer additions. At the same time, we continue to see momentum from partners and central monitoring stations, while regulatory changes in certain markets are expected to support adoption of Security-as-a-Service.

Overall, the visibility is improving, and we are encouraged by both customer renewals and new project commitments.

In conclusion, could you highlight three reasons why Irisity is a good investment today?

• Execution on a clear streamlining plan

Irisity is delivering on a SEK 40 million cost-saving program through streamlined R&D, a leaner go-to-market organization, and reduced reliance on high-cost one-time projects. This is expected to bring operating expenses in line with current sales levels and support the transition to cash flow break-even in 2026.

• Well positioned to reaccelerate growth

The AI video analytics market is projected to grow at a double-digit CAGR in the coming years. With a proven and scalable platform, a strong installed base, a partner-driven mid-market expansion strategy, and upcoming generative AI forensic search capabilities, Irisity is well positioned to capture this opportunity. Customer relationships are long-term and sticky, the industry has high barriers to entry, and Irisity’s technology is validated by leading customers.

• Building a solid base of recurring revenues

Recent contract expansions with enterprise and government customers, together with multi-year support agreements, demonstrate both confidence in the technology and visibility into future revenues. Combined with a stronger focus on SaaS and Security-as-a-Service, this underpins a more predictable and scalable business model.