#USA #London #Industrial AI #IFS #Annual Recurring Revenue

IFS Announces Strong FY2025 Financial Results

IFS, a leading provider of Industrial AI software, reported notably robust financial performance for the fiscal year ending December 31, 2025. The company experienced a remarkable 23% year-on-year growth in Annual Recurring Revenue (ARR), solidifying its position in the competitive industrial software market. This report indicates not just success in numbers but also highlights a crucial trend in industrial operations: the transition of AI technology from the experimental stage to extensive operational deployment.

Key Financial Highlights

In FY2025, IFS showcased substantial growth across various financial metrics:

• - Annual Recurring Revenue (ARR): Increased by 23% compared to the previous year
• - Cloud Revenue: Experienced a strong boost of 30% YoY
• - Recurring Revenue: Comprises 83% of total revenue, demonstrating a solid foundation
• - Net Retention Rate (NRR): Reached an impressive 114%
• - Operating Margin Expansion: Increased by 5 percentage points (pp) YoY

These achievements reflect a positive shift among large enterprises, which are now not just curious about AI capabilities but actively implementing AI solutions to achieve practical results across various operations, including manufacturing and supply chain management.

Industrial AI Impacting Businesses

IFS's Industrial AI platform is designed to deliver full-scale production results, especially in areas where generic AI methods fall short. The typical journey for clients begins with focused applications specific to their operational needs, yielding quick returns on investment (ROI) before expanding these implementations across more assets and business units.

Highlights of customer expansion include a 14% YoY growth in average deal size and a strong emphasis on improving customer lifetime value, evidenced by an 87% Customer Satisfaction (CSAT) score. Notable clients like ArcelorMittal, Callaway, and Japan Airlines have not only adopted IFS solutions but also expanded their use, showing trust in the technology's capabilities.

Innovation and Strategic Partnerships

The innovation at IFS is notable, with advancements such as IFS Nexus Black™, enabling rapid deployment of AI functionalities in response to specific customer challenges. Additionally, the introduction of the IFS Agent Studio empowers companies to implement Agentic Digital Workers, which significantly enhance operational efficiency.

Collaborations with key industry players like Microsoft and Siemens further bolster IFS's mission to advance autonomous operations, showcasing how strategic partnerships accelerate the development and implementation of cutting-edge solutions in industrial settings.

Market Expansion Through Acquisitions

In 2025, IFS broadened its Industrial AI capabilities and market presence through calculated acquisitions:
1. TheLoops: Designed an Agentic AI workforce aimed at mission-critical industries, with potential implementations showing a capacity increase of up to 10 times.
2. 7Bridges: Introduced AI-driven enhancements in supply chain and transportation sectors.
3. Softeon (anticipated to finalize in Q1 2026): Will extend IFS's offerings within warehouse management and robotics integration, creating a seamless supply chain orchestration process.

Earlier acquisitions, including Copperleaf and Poka, contributed significantly to the growth seen in FY2025, indicating the importance of both internal innovation and external growth strategies.

A Commitment to Profitable Growth

Throughout FY2025, IFS successfully combined high growth rates with improved profitability, evident from the operating margin's expansion. CEO Mark Moffat emphasized that 2025 marked a pivotal moment for Industrial AI, transitioning from pilot projects to extensive, impactful implementations across crucial operational environments.

CFO Matthias Heiden noted, "The quality of IFS's financial performance is evident from our 23% ARR growth and the resilient financial framework that allows us to invest in continued innovation while maintaining strong profit margins."

Future Outlook

Industry analysts have recognized IFS's leadership in the market, as highlighted by several accolades in the Gartner Peer Insights Customers' Choice awards and favorable positions in Gartner Magic Quadrants. Looking forward, IFS aims to deepen the integration of Industrial AI into everyday operations, assisting clients in achieving quicker, more consistent outcomes at scale.

In summary, IFS's FY2025 results signify a notable turning point in the industrial software sector, with companies prioritizing customized platforms that deliver quantifiable results. With plans for continued growth and innovation, IFS is well-positioned to meet the evolving demands of industrial enterprises in the coming years.