Skkynet Cloud Systems, Inc. (OTCQB: SKKY) announced financial results for the second quarter and six-month period ended April 30, 2026, highlighting a 27% increase in subscription revenue mix as the company accelerates its transition to a recurring revenue model. The industrial software provider also reported a 37% surge in deferred revenue to $476,797, signaling growing customer commitment to subscription contracts.
Revenue for the second quarter rose approximately 4% to $606,106 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 shift from perpetual to subscription licenses. CEO Gary Tillery explained in the release that when customers choose subscriptions, the same total contract value is recognized over two or three years rather than immediately, temporarily reducing reported revenue but building a higher-quality, predictable base.
The subscription mix grew to 15% of sales for the six-month period, up from 11.8% in FY2025. Deferred revenue increased 37% from $347,686 at fiscal year-end, reflecting a build-up of subscription contracts that will drive future recognized revenue. Net loss for the second quarter improved by approximately 52% to $(109,392) compared to $(227,723) in Q2 FY2025, while the company maintained a solid cash position of $1,339,191 and working capital of $1,003,773.
Skkynet is also advancing its C$2.6 million Industrial AI product development initiative, supported by FedDev Ontario, on schedule. The project involves developing an agent harness designed for the strict requirements of industrial environments, which demand security, reliability, real-time performance, and deterministic behavior that consumer AI solutions do not address. The company’s secure-by-design architecture and over 25 years of industrial data connectivity experience position it to build the data backbone for AI-driven industrial operations.
The operating loss for the period reflects deliberate investment in leadership, product development, and market expansion. The company expanded its executive team and advisory board, increased go-to-market activities including presence at events such as AVEVA World, CSIA Conference, Hannover Messe, and granted stock options to 19 individuals. Working capital declined only $23,942 over the six-month period despite this investment spending, demonstrating the company’s ability to fund its strategy while the subscription revenue base builds.
“Solid cash and working capital give us the foundation to invest confidently in the platform that will drive our future growth,” Tillery said. “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.”
The results underscore Skkynet’s strategic pivot to recurring revenue, which provides more predictable income and aligns with industry trends toward subscription-based software. The company’s strong cash position enables continued investment in AI and market expansion without compromising financial stability.
