Solution Dynamics (SDL) H2 2025 earnings summary

Executive summary

• Net profit after tax for FY2025 was $2.62 million, down 7.1% year-over-year, with EPS at 17.8 cents, a 7.0% decrease.

• Revenue increased 6.9% to $41.3 million, driven by price increases and growth among nine of the top ten customers, despite a 15% revenue drop from the largest customer.

• Significant cost restructuring was implemented in response to the major customer’s revenue decline, with full benefits realized in the final quarter.

• Cash flow from operations improved to $4.3 million, and net cash on hand rose to $11.2 million.

• Final dividend declared at 3.0 cents per share, with a payout ratio of 16.8%.

Financial highlights

• EBITDA declined 8.0% to $4.45 million; gross profit fell 3.8% due to higher cost of goods sold.

• Gross margin decreased to 34.6% from 38.4% year-over-year.

• SG&A expenses were effectively controlled, down 1.7% for the year.

• Net assets increased to $11.3 million, and capital expenditures were $0.1 million.

• Dividend per share dropped to 3.0 cents from 9.5 cents in the prior year.

Outlook and guidance

• FY2026 net profit forecasted between $0.1 million and $0.6 million, reflecting the full impact of the major customer’s shift to a multi-vendor model.

• Continued market share gains expected in New Zealand, with growth opportunities in council water billing and digital transformation.

• International growth outside the major customer remains positive, with focus on scaling digital and print solutions.

• Key initiatives include expanding dental sector software, enhancing digital deliverability, and pursuing bolt-on acquisitions.

• Macroeconomic and global charity sector headwinds expected to persist.