NCC Group (NCC) H1 2025 earnings summary

Executive summary

• The group operates two main businesses, Cyber Security and Escrow/Escode, serving a diverse global client base and positioned for growth in evolving markets.

• Strategic transformation has led to a simplified, cost-efficient, and debt-free structure, with strong recurring revenues and improved gross margin.

• Escrow/Escode achieved ten consecutive quarters of revenue growth and improved gross margin; options for its sale are being explored, potentially enabling a return of capital to shareholders.

• Cyber Security faced revenue decline due to market shifts and challenging client investment, but is pivoting to higher-value, strategic projects with a growing pipeline.

• The group is now debt-free following the Fox Crypto business disposal, with new financial facilities secured and a more focused operational structure.

Financial highlights

• Group revenue declined by 4.9% year-over-year to £156.8m, mainly due to a drop in Cyber Security, while Escrow/Escode delivered growth.

• Adjusted profit before tax increased by 97.6%, driven by operational control and the Fox Crypto disposal.

• Adjusted EBITDA fell 15.7% to £21.5m, but gross margin improved by 0.4 percentage points to 43.2%.

• Net debt eliminated, with net cash of £0.3m at period end, compared to net debt of £53.5m a year earlier.

• Interim dividend maintained at 1.50p per share, marking 20 consecutive years of payments.

Outlook and guidance

• FY25 adjusted EBITDA expected to remain in line with previous guidance, with gross margins maintained.

• Group revenue (excluding non-core disposals) to decline marginally, with single-digit growth for Escrow/Escode and Cyber Security to decline ~5%.

• Cyber Security pipeline is building, with revenue growth expected to return in FY26.

• Ongoing discussions regarding potential Escrow/Escode divestment, which could enable significant capital return to shareholders.