Newmark Security (NWT) H1 24/25 earnings summary

Executive summary

• Interim results show a first-half loss, expected due to second-half weighting and strategic investments, with positive full-year EBITDA and margin improvement anticipated from recurring revenues.

• Revenue for H1 FY25 was £10.2 million, down 1% year-on-year due to project phasing in Physical Security Solutions.

• Focus remains on accelerating growth through HCM partnerships, expanding recurring revenue streams, and scaling innovation, especially via GT Connect and alliances with Oracle, Workday, and SAP.

• Strategic investments in people, systems, and R&D are expected to yield long-term benefits, despite short-term impacts on profitability.

• EBITDA declined to £0.5 million from £0.8 million, reflecting increased investment aligned with a new five-year strategic plan.

Financial highlights

• Group revenue for the half year was £10.2 million, down from £10.4 million year-on-year, with H2 expected to be stronger due to contract timing.

• Annual recurring revenue (ARR) reached £3 million in October 2024, up 30% year-on-year.

• Gross profit was £3.9 million, flat year-on-year, with gross margin up 0.9 percentage points to 38.1%.

• EBITDA decreased by £0.3 million to £0.5 million due to a 10% rise in overheads from inflation and strategic investments.

• Loss after tax was £0.4 million, with a loss per share of 4.60 pence.

Outlook and guidance

• Management expects a strong second half, with sales pipelines at record levels and full-year performance anticipated to surpass the previous year.

• Margin improvement is forecasted year-on-year, driven by recurring HCM revenues and strategic partnerships.

• Profitability is improving each quarter, with the trend expected to continue into Q4 FY25.

• Continued investment in growth initiatives, especially in HCM and direct-to-enterprise channels, is expected to deliver long-term value.

• Safetell is on course for improved H2 performance.