Skkynet Cloud Systems, Inc. (OTCQB: SKKY) announced financial results for the second quarter and six-month period ended April 30, 2026, highlighting a strategic shift toward subscription-based revenue and progress on its industrial AI product development initiative.
Revenue for the second quarter reached $606,106, a 4% increase from $585,712 in the same period last year. However, six-month revenue declined 18% to $1,155,499 compared to $1,414,764 in FY2025, a drop the company attributes to the deliberate transition from perpetual to subscription license models. Subscription revenue as a percentage of sales grew to 15% for the six-month period, up from 11.8% in the prior year—a 27% increase in subscription mix. Deferred revenue surged 37% to $476,797 from $347,686 at fiscal year-end, reflecting the accumulation of subscription contracts that will drive future recognized revenue.
“The decline in our six-month reported revenue is the expected result of a deliberate and strategic shift,” said Gary Tillery, CEO of Skkynet. “When customers choose subscription licenses over perpetual licenses, the same total contract value is recognized over two or three years rather than immediately. This temporarily reduces reported revenue, but it builds a higher-quality, predictable, recurring revenue base.”
The company reported a net loss improvement of approximately 52% for Q2, with a loss of $(109,392) compared to $(227,723) in Q2 FY2025. Skkynet maintains a solid cash position with $1,339,191 in cash and cash equivalents and working capital of $1,003,773, providing financial flexibility to execute its strategic plans.
The company’s C$2.6 million Industrial AI product development initiative, supported by FedDev Ontario, is proceeding on schedule. Skkynet is developing an agent harness specifically designed for the rigorous requirements of industrial customers, addressing needs for security, reliability, real-time performance, and deterministic behavior that consumer AI solutions do not meet. “Skkynet’s secure-by-design architecture and over 25 years of industrial data connectivity experience uniquely position the Company to build the data backbone for the AI-driven industrial future,” the press release noted.
Operating losses during the period reflect deliberate investments in leadership, product development, and market expansion. The company expanded its executive team and advisory board, increased go-to-market activities including presence at major industry events such as AVEVA World, CSIA Conference, Hannover Messe, EXPONOR, SPS Italia, and ProveIT, and granted stock options to 19 individuals to align the team with long-term value creation. Despite these investments, working capital declined only $23,942 over the six-month period, demonstrating the company’s ability to fund its strategy while building the subscription revenue base.
“Solid cash and working capital give us the foundation to invest confidently in the platform that will drive our future growth,” concluded Tillery. “We are building the secure data backbone to provide clean, secure, real-time OT data to wherever it needs to go, securely so that every other application you've invested in, like AI, can actually work—and we are doing it from a position of industry thought leadership, financial discipline and strength.”
The implications of this shift are significant for the industrial software sector. By transitioning to a recurring revenue model, Skkynet aims to create a more predictable revenue stream, which could enhance investor confidence and support sustained investment in innovation. The development of an agent harness for industrial AI deployments addresses a critical gap in the market, as industries increasingly adopt AI but require solutions that guarantee security, auditability, and real-time determinism. Skkynet’s strong cash position and strategic investments position it to capitalize on this growing demand.
For more information, visit skkynet.com.
