**Summary of Shearwater Group PLC Interim Results for H1 FY26 (Ended 31 December 2025)**
**Financial Highlights**
**Revenue Growth** £14.0 million, up 31% YoY (from £10.7 million in Jul-Dec FY25) and 24% from the reported FY25 interim results (Apr-Sep FY25: £11.3 million). Growth driven by organic expansion and FY25 contract wins.
**Adjusted EBITDA** £0.0 million (vs. £0.1 million profit in Jul-Dec FY25), with a reported loss of £0.4 million for H1 FY25.
**Administrative Expenses** £2.9 million, down 6% YoY, reflecting cost reduction initiatives and FY25 restructuring.
**Cash Position** £2.2 million, impacted by short-term project cash flow timing. Adjusted for a £1.5 million contract outflow resolved in January 2026, the balance would have been £3.7 million (vs. £3.6 million in Dec 2024).
**Operational Highlights**
**Services Momentum** Strong demand from blue-chip clients in Telecommunications, Financial Services, and Government sectors.
**Contract Wins** Notable wins include a £7.3 million extension with a mobile network operator and expansions in Central Government.
**Pentest Business** Returned to profitability post-FY25 restructuring.
**Software Solutions** Continued demand for on-premise solutions, particularly in regulated sectors.
**H2 Start** Positive momentum with a £9 million renewal/extension in global financial services post-period end.
**Board Update**
Robin Southwell appointed as Chair effective 1 February 2026.
**Outlook**
**Pipeline Strength** Robust pipeline supported by Services momentum, with H2 wins aligning to peak sales cycles.
**Margin Improvement** Expected in H2 as new solutions are delivered.
**Full-Year Confidence** Board remains confident in meeting market expectations for FY26.
**CEO Commentary (Phil Higgins)**
Highlighted progress in revenue growth and operational performance, driven by demand in high-threat environments.
Emphasized Services business momentum, Pentest profitability, and software portfolio investments.
Confident in H2 performance and FY26 market expectations, supported by recent contract wins and margin improvements.
**Market Opportunity**
Cybersecurity market projected to grow at 14% CAGR globally and 10-12% in the UK, driven by escalating cyber threats.
Shearwater’s differentiated full-service offering positions it to capitalize on this growth.
**Segment Performance**
**Services** 37% revenue growth to £12.9 million, driven by cloud-hosted software and FY25 contracts. Gross margin slightly down to 17% due to revenue recognition policy changes.
**Software** Revenue declined 12% to £1.1 million but remained stable compared to FY25 pro-rated totals.
**Financial Position & Cash Flow**
H1 cash outflow due to timing of project payments, with net cash used in operations at £2.4 million.
Strong financial position to support growth initiatives.
**Conclusion**
Shearwater Group demonstrated resilient H1 performance with strong revenue growth, operational improvements, and strategic contract wins. Despite short-term cash flow challenges, the company is well-positioned to capitalize on cybersecurity market opportunities, with confidence in delivering full-year expectations.
| Metric | H1 FY26 (unaudited) | H1 FY25 (unaudited) | YOY Change |
|---|---|---|---|
| Revenue | £14.0m | £10.7m | +31% |
| Gross Profit | £2.9m | £3.2m | -10% |
| Adjusted Administrative Expenses | £2.9m | £3.1m | -6% |
| Adjusted EBITDA | £0.0m | £0.1m | -100% |
| Cash and Cash Equivalents | £2.2m | £3.6m | -39% |
| Debt (Long-term) | £3.5m | £4.5m | -22% |