The Debate On Imdex’ Short-Term Risk

Small Caps | 2:41 PM

The growth profile for Imdex looks backstopped by global exploration and a growing contribution from tech earnings, but is Q4 at risk of disappointment?

• Imdex's third quarter revenue update raised some questions about growth
• Rising global exploration budgets and growing demand for mining technology solutions
• Analysts highlight strong sensor and technology growth for Imdex
• Is Q4 poised to disappoint?

By Danielle Ecuyer

Third quarter update served up a slight miss

Markets are forward looking and with commodity-exposed cyclical stocks, the central question for some analysts is, ‘can such a company outperform through the cycle?’

Imdex ((IMD)) is placed in the sweet spot of rising global exploration spending, as vindicated by its 3Q26 trading update not that long ago.

Breaking down the quarter contributions, Morgans views the numbers as somewhat “muddled” by recent acquisitions Datarock and Krux, which were fully consolidated into the accounts over the quarter.

(For more details see https://fnarena.com/index.php/2025/12/11/imdex-builds-rock-knowledge-acquisitively/)

Forex has had an implied impact over the quarter, with group revenue up 23% y/y and organic revenue rising 19% y/y. As highlighted by the Morgans analyst, but for forex, the group's top line results would have aligned more closely with top-of-the-market forecasts.

In constant currency terms, group revenue rose 29% annually and organic revenue was up 26%. Sensors performed strongly, as volumes advanced by 33% y/y compared to revenue growth over the period of 27% year-on-year.

Fluids growth erred on the soft side; sales rose 7%, with the analyst attributing some of the weakness to allocation to integrated services.

Bell Potter observes the quarterly revenue was broadly in line with forecasts. Highlighting the segmental breakdown across divisions, 70% of group revenue was generated by sensors, services and software revenue, a rise from 68% in 1H26.

The rise in tools on hire, up 33%, would also account for some of the growth.

Sensor revenue rose 27%, field services lifted 27%, Imdex mining technologies up 26%, digital up 114%, and sale of goods 7%.

Americas and APAC were the best performers, leading revenue growth by 27% and 28%, respectively.

Notably, demand was robust across sensors and field services. Management pointed to negligible Middle East impacts.

Drilling down to more details offers some answers

Canaccord Genuity’s breakdown of the update explains organic revenue, up 19% ($119m), was spot on the mark for expectations. The result also implies around $4m in revenue from the recent acquisitions versus a $6.7m estimate, which is attributed to the deferred settlement of the additions.

The difference of circa -$1.9m less revenue is considered inconsequential from this broker’s perspective.

There was no mention of earnings or margins in the trading update, but the outperformance of tools and tech relative to fluids is highlighted as positive for margin accretion.

Morgans has a similar take, explaining the Devico acquisition (sensors) had a circa 45% earnings (EBITDA) margin at the time of acquisition.

In contrast, fluids usually generate mid-teen margins.

A word or two of caution

Jarden is more circumspect, pointing to a “moderation” in revenue growth from 12.5% in 1H26 relative to 2H25, to flat in 3Q26 relative to 2Q26.

While not breaking down the revenue divisionally like the other analysts, Jarden believes the relative slowdown has occurred at a time when a ramp up in exploration activity is happening post equity raisings.

Customer exploration budgets are expected to rise by 15% to 20% growth in 2026, supported by higher gold prices.

Imdex detailed junior exploration remains active in WA and Western Canada, while also referring to global exploration budgets, largely from the major operators.

Management also highlighted growth in primary commodities of gold and copper in Australia and South America.

For Canaccord, this is a “traffic lights have turned green” moment.

As for Bell Potter, this analyst details R6M junior raising advanced 74% y/y in April, a slowdown since the peak in October 2025.

R6M refers to the rolling six months equity raisings by junior mining and exploration companies.

Observing the period between capital raisings and the deployment of funds has extended over the usual 6-9 months, Bell Potter remains upbeat on the recovery in junior exploration over 2026.

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