A2Z Cust2Mate Solutions (NASDAQ:AZ) reported a sequential increase in third-quarter revenue as Smart Cart deliveries more than doubled, and executives said the company remains on track to reach 10,000 cumulative deliveries by the end of 2026.
The company reported revenue of $10.9 million for the third quarter of fiscal 2026, up from $5.9 million in the second quarter. Smart Cart revenue rose to $9.6 million from $4.4 million, while deliveries increased to 2,000 carts from 950.
Deliveries Rise as Margins Narrow
Third-quarter deliveries brought A2Z’s cumulative total to 5,350 carts, Chief Financial Officer Gadi Levin said. The company continued deliveries to Yochananof, began initial deliveries under Super Sapir’s expanded commitment of 7,000 carts and continued fulfilling HaStock’s order.
HaStock placed a follow-on order for 1,050 carts in August, increasing its total commitment to 3,050, Levin said. He noted that both HaStock and Super Sapir expanded their orders after deploying the carts.
Gross profit rose to $3.7 million from $2.5 million in the second quarter, but gross margin fell to 33.4% from 42.6%. Levin attributed the decline to deliveries of lower-margin, earlier-generation carts to one customer. He said A2Z expects to work through its remaining legacy inventory by year-end.
The operating loss narrowed to $6.8 million from $7.6 million in the prior quarter. Net loss was $6.6 million, or $0.15 per share, compared with $7.3 million, or $0.16 per share, in the second quarter.
Levin said the company expects its organizational realignment to reach a full quarterly savings run rate of approximately $1.75 million in the fourth quarter, equivalent to $7 million annually.
Hedia Adds Retail Media Business
Graus said Hedia generates approximately $20 million in annual revenue and brings relationships with retailers and advertisers, as well as campaign planning and sales capabilities. A2Z expects the acquisition to add approximately $5 million in revenue in the fourth quarter and to be immediately accretive.
During the question-and-answer session, Graus said the combination would allow A2Z to offer in-store retail media across digital screens, end caps and other displays, as well as its Smart Carts. He said initial conversion and adoption metrics for Smart Cart media looked positive but that it was too early to provide exact figures.
In Israel, Cust2Mate and Hedia will run the retail media business jointly, Graus said. Outside Israel, Cust2Mate would use Hedia’s experience but manage and operate the business on its own.
A2Z paid approximately $8.4 million in cash and issued 833,333 restricted common shares to Hedia’s sellers at closing, Levin said. Approximately $7.1 million of the cash consideration was funded through an October term loan from a commercial bank.
Outlook Calls for Fourth-Quarter Delivery Increase
To reach its year-end goal of 10,000 cumulative cart deliveries, A2Z expects to deliver 4,650 carts in the fourth quarter. The company also maintained its expectation for approximately $25 million in second-half Smart Cart revenue, excluding Hedia.
Graus said the company expects cumulative deliveries of at least 19,000 carts by the end of 2027 based exclusively on its current backlog, without assuming additional orders. He also said A2Z expects to deploy carts at two international retailers outside Israel in the first quarter of 2027, but declined to provide estimated cart volumes for those deployments.
Asked about competitor Caper’s exit from the market, Graus said A2Z was engaging with former Caper customers and believed the disruption could create opportunities. He said the pace of future deployments would depend in part on retailers’ readiness to adapt their stores.
A2Z ended the third quarter with $30 million in treasury and $42.3 million in working capital, figures that do not reflect the Hedia acquisition. Levin said the company uses borrowing in part to fund the gap between recognizing hardware revenue upon delivery and collecting customer payments over the contract term.
About A2Z Cust2Mate Solutions (NASDAQ:AZ)
A2Z Cust2Mate Solutions Corp. is a technology company focused on transforming the in-store grocery shopping experience through smart shopping carts and retail technology. The company develops the Cust2Mate platform, which combines a shopping cart, touchscreen interface and software designed to support customer engagement and checkout activities. Cust2Mate’s solutions are intended to help grocery retailers provide services such as product discovery, in-store navigation, digital promotions, personalized offers and self-checkout.
