Results reading: FY26 Results
The headline numbers were already known from the July trading update and land marginally above it (revenue £42.3m against c.£42m, adjusted EBITDA £2.6m against £2.5m). What is new is the weakness underneath: Software slid through H2 and its carrying value now rests on an unproven product, Services gross margin fell to 18.7%, and three customers account for about 72% of revenue.
What changed against what was known
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Worse
Software got worse after H1: full-year adjusted EBITDA was £0.2m against £0.4m already earned in H1, which implies a loss in H2, and gross margin fell to 49.6%.
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Worse
Services gross margin fell to 18.7% from 21.6% as large deals carried a lot of third-party software. The H1 promise of margin improvement in H2 only partly showed (H1 was 17%, so H2 was roughly 19.5% by my calculation), still below last year.
Then · 17 Mar 2026 · Half-year Results“Margin improvement expected in H2 as new solutions are delivered” -
New
Software was restructured in June 2026, cutting annualised spend by £0.8m. Management expects better FY27 performance but gives no figure.
“a reduction of annualised expenditure by £0.8 million (£0.5 million capital expenditure and £0.3 million operating expenditure).” -
New
New detail on FY27: a first Japanese financial client win (£1.2m), plus trading described as in line with expectations.
“£1.2m new client win with one of Japan's largest financial groups to provide core email protection technology;”
1 point only confirm what the company said before
- Final figures confirm the trading update: adjusted EBITDA £2.6m against the £2.5m guided and market expectations of £2.4m, with revenue a little above c.£42m. “Adjusted EBITDA of £2.6m, an annualised increase of 44% (FY25: £2.2m for the 15-month period), reflecting revenue growth and continued cost discipline”
What the notes say – not in the headline numbers
Headroom is thin in the sensitivity runs. Cutting growth by 5% a year after FY27 would trigger impairments of £0.6m in one cash-generating unit and £1.4m in another. The Directors say avoiding impairment in Software leans on the enhanced Data Discovery product producing material revenue from FY27.
Software revenue is falling, yet its carrying value depends on a product that has so far contributed almost no revenue.
“Retaining the revenue and cost assumptions for FY27 in line with the detailed Board-approved budget but reducing the anticipated revenue growth rate thereafter by 5% p.a., with administrative cost growth reduced by 2.5%, would result in an impairment of...”The FY27 budget assumes Services revenue shifts towards higher-margin business so group gross profit still rises. Services revenue growth is set at 10% a year from FY28.
Margin fell in FY26, so the budget (and impairment test) depends on that reversing.
“In respect of the Group's Services business, which includes Brookcourt and Pentest, the FY27 budgets reflect an expected change in mix towards higher-margin revenues to still deliver an increased year-on-year gross profit across the Group.”Three customers each exceeded 10% of revenue and together contributed £30.3m, about 72% of group revenue of £42.3m (FY25: £21.7m of £39.5m, about 55%).
Dependence on a few large renewals has grown, so losing or delaying one would hit results hard.
“In the year to 30 June 2026, three customers within the Group made up more than 10% of the Group's revenue (FY25: three).”Going concern is supported by forecasts to June 2028 and a reverse stress test with revenue down by up to 15% on all lines. Cash stayed positive even with no cost mitigation.
With £5.6m cash and no borrowings, this makes balance-sheet risk look low, although the test is only a 15% revenue cut.
“The reverse stress test assumes a reduction of up to 15% across all revenue lines.”Promises management made Track record →
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Kept
Deliver further growth in revenue and EBITDA in FY26
Revenue £42.3m and adjusted EBITDA £2.6m both exceed the FY25 15-month figures (£39.5m, £2.2m), so growth is delivered even before annualising.
“Revenue of £42.3m, representing annualised growth of 34% (FY25: £39.5m for the 15-month period), driven by major contract wins within Services business” -
Kept
Seek shareholder approval for capital reallocation to enable buybacks or dividends
Shareholders approved the first stage on 13 October 2026. It is a first step only; no dividend or buyback is declared.
“I was delighted that in October 2026, the first step in this process received overwhelming support from shareholders at a General Meeting of the Company.”
No longer mentioned
Anzen post-quantum data-protection product added to the Services portfolio
Last said · 17 Mar 2026 · Half-year Results“As a result, we were delighted during the period to add Anzen, a post-quantum-safe data-protection system that anonymises, shards, and securely distributes sensitive data to our portfolio of products.”
Not in this report at all – which can mean nothing, or a plan quietly dropped.
Watch at the next report
- Whether Software revenue and EBITDA recover in FY27 after the June 2026 restructuring, and whether Data Discovery brings in meaningful revenue.
- Whether Services gross margin recovers from 18.7% as the FY27 budget assumes.
- Renewal and delivery on the three customers that make up about 72% of revenue, and any step from the capital reduction towards a dividend or buyback.
Read 28 Oct 2026 against the last statement, the previous results and the open promises. Quotes are the company's words; the rest is our reading. Not investment advice.