X2M Connect Ltd (ASX: X2M) has expanded into Japan’s water digitisation market through a new software development agreement with long-term partner Azbil Kimmon, extending an existing relationship in gas metering into the water sector.
Under the agreement, X2M will provide its Internet of Things (IoT) platform via a Software as a Service (SaaS) model to support Azbil Kimmon’s smart water metering rollout in Japan.
The initial phase of the contract is valued at $200,000 and covers deployment and services for up to 5,000 connected water metres over a two-year term.
Within the contract period, the scope can be expanded to as many as 50,000 metres, at an additional $25,000 for each block of 5,000 metres. This uplift is expected to generate a further $225,000 in service fee revenue if fully executed.
The agreement is expected to progress to an ongoing SaaS arrangement, mirroring the structure of X2M’s existing gas monitoring and control contract with Azbil Kimmon that has been in place since 2020.
X2M CEO Mohan Jesudason said: “The Japan water market is large and represents a significant SaaS opportunity for X2M, aligning well with the strategic program we established last year. Japan has around 60 million water meters, the majority of which are ageing mechanical units managed by local government-operated utilities, creating strong demand for digital transformation, automated meter reading and remote leak detection.
“It is a strong validation of our capabilities that Azbil Kimmon has chosen to extend our existing six-year relationship into the water sector. We will leverage our extensive experience in water digitisation in South Korea, which represents ~80% of Group revenue, to deliver an enhanced platform service to Azbil Kimmon. We look forward to building a successful and expanding partnership with Azbil Kimmon in this new area, which offers significant potential for X2M.”
Building on six-year gas monitoring partnership
X2M already supports Azbil Kimmon in Japan through gas meter monitoring services that enhance safety and logistics for gas bottle delivery and dispatch.
The extension of this partnership into water metering leverages X2M’s established experience in water digitisation in South Korea, which currently accounts for about 80% of group revenue. That capability is now being adapted to deliver an enhanced monitoring and control platform for Azbil Kimmon’s “smart meter as a service” model in Japan.
Azbil Kimmon develops, manufactures and sells city gas, LP gas and water meters, and provides engineering services such as meter replacement, alongside its growing smart metering data services business.
Large Japanese market and $100 million SaaS opportunity
Japan’s water and sewage services are predominantly operated by local government entities, many of which still rely on ageing mechanical analogue water metres.
The Japanese Government is promoting digital transformation across water and sewerage systems to address ageing infrastructure, labour shortages and rising operating costs. As part of this push, the Ministry of Land, Infrastructure, Transport and Tourism has issued a Catalogue of Digital Technology in Water and Sewerage Systems, highlighting advanced solutions ranging from predictive maintenance to data management platforms.
Japan has about 60 million water meter connections, with automated meter reading and remote leak detection identified as key needs for utilities. X2M estimates the total addressable market for SaaS monitoring services across these meters at more than $100 million per year, assuming broad adoption of digital solutions.
The new agreement positions X2M to participate in this market alongside Azbil Kimmon, delivering smart water metering solutions tailored to Japanese utility requirements.