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The industrial software company IFS reported strong growth in 2025 as artificial intelligence moved from pilot projects into large-scale operational use in manufacturing, energy and logistics.

According to the company’s financial results for the year ending on 31 December 2025, IFS’s annual recurring revenue grew by 23 percent year on year. Cloud revenue increased by 30 percent, while recurring revenue accounted for 83 percent of total revenue. The company also reported a net retention rate of 114 percent, indicating that existing customers expanded their use of IFS’s services.

IFS says the figures reflect a broader shift in how large industrial companies are adopting artificial intelligence. Rather than testing AI in isolated projects, companies are now deploying it across core operations such as asset maintenance, supply chains, field service and warehouse management.

“Enterprises have moved beyond pilots and are scaling AI across the operations that matter most,” said Mark Moffat, Chief Executive Officer of IFS, in a statement.

Focus on Industrial AI

IFS positions its products under the concept of “Industrial AI”, aimed at asset-intensive industries where systems must operate reliably in real-world conditions. The company says customers typically begin with limited use cases and expand deployments as returns on investment become clear.

This trend was reflected in a 14 percent increase in average deal size during 2025, according to the company. Customer satisfaction remained high, with an average CSAT score of 87 percent.

IFS has also sought to strengthen its offering through partnerships with technology companies including Microsoft, Siemens, Anthropic and Boston Dynamics. The aim is to accelerate the development of more autonomous industrial systems.

During the year, IFS won or expanded contracts with customers such as ArcelorMittal, Japan Airlines, TotalEnergies, Tampa Electric and Westinghouse.

Acquisitions broaden capabilities

The company expanded its portfolio through several acquisitions in 2025. These included TheLoops, which focuses on so-called agentic AI for industrial workforces, and 7Bridges, which develops AI-based tools for supply chain and transport optimisation.

IFS also announced the acquisition of warehouse software company Softeon, expected to be completed in early 2026. Earlier acquisitions, including Copperleaf, Poka and Ultimo, also contributed to growth during the year.

Alongside revenue growth, IFS reported improved profitability. Operating margins increased by five percentage points compared with the previous year.

According to Moffat, the company’s strategy is to focus on AI applications that deliver measurable operational benefits. “As customers see returns, they expand their use and commit more deeply,” he said.