Next 15 Group (NFG) H1 2025 earnings summary

Executive summary

• Net revenue was flat year-over-year at £286.8m, with organic revenue down 2.2% and adjusted operating profit declining 15.6% to £48.1m due to tech and government sector weakness and the loss of a major contract.

• Adjusted diluted EPS dropped to 30.3p from 37.9p, and interim dividend was maintained at 4.75p per share; £5.3m was returned to shareholders via share buybacks.

• Net debt increased to £74.8m, mainly due to working capital outflows, earn-out payments, and increased debtors.

• Tech and government client revenues declined, but strong growth was seen in B2C, FMCG, and health sectors, with robust performances from SMG, M Booth, M Booth Health, MHP, and Brandwidth.

• Significant new client wins and bolt-on acquisitions, including Studio La Plage, TUVA, and Cadence Innova; continued investment in AI and data modernization with over 130 AI projects underway.

Financial highlights

• Adjusted profit before tax declined 17.8% to £45.7m; profit after tax at £33.3m, down from £40.6m.

• Organic revenue declined 2.2%, partially offset by modest acquisitions and FX impact.

• Operating margin decreased to 16.8% from 19.9% year-over-year.

• Net cash inflow from operating activities fell to £4.6m from £11.0m; net capex at £3.3m.

• Estimated earn-out commitments reduced to £119.5m from £177.3m since January.

Outlook and guidance

• Confident in meeting revised market expectations after early end of large Mach49 contract; profitability expected to be more second-half weighted due to cost actions.

• Margin improvements anticipated as operational changes and restructuring take effect in H2.

• No recovery in tech client spend expected in H2 or FY26; government spend anticipated to recover in early FY26.

• Continued focus on AI-powered services, automation, and client synergies for future growth.

• Public sector revenues are expected to rebound in the first part of next year.