Calnex Solutions (CLX) H1 2025 earnings summary

Executive summary

• Revenue for H1 FY2025 was £7.4 million, down 6% from £7.8 million in H1 FY24, reflecting challenging telecoms markets but resilient trading.

• Loss before tax was £1.3 million, compared to a £0.6 million profit in H1 FY24, due to subdued order levels and a largely fixed cost base.

• Gross margin remained robust at 74%, unchanged from the prior year.

• Closing cash at period end was £8.6 million, rising to £10.3 million post-period due to tax refunds and R&D credits.

• Interim dividend of 0.31p per share declared, matching the prior year.

Financial highlights

• Gross margin held steady at 74%, with gross profit shortfall due to lower revenue volumes.

• EBITDA for H1 FY25 was £984k, down from £1.4m in H1 FY24; EBITDA margin declined to 13% from 18%.

• Loss per share was 1.13p, and the effective tax rate was 24%.

• Inventory investment increased to £6.1 million to support anticipated orders.

• Cash outflow of £3.3 million in H1, mainly due to inventory build and working capital movements.

Outlook and guidance

• H2 is expected to be cash-generative, with revenue growth anticipated from new product launches and expanded channel partnerships.

• FY25 performance is expected to be in line with market expectations, with new product initiatives anticipated to drive revenue growth in H2 and FY26.

• The telecoms market is expected to remain challenging through FY2025, but the company is not relying on a sector recovery for growth.

• Diversification across end markets and a strong balance sheet provide confidence for future performance.

• Increased order backlog entering H2, with improved Q2 order performance.