Gamma Communications (GAMA) H2 2025 earnings summary

Executive summary

• Delivered strong FY2025 results with double-digit growth in gross profit (+16%) and EBITDA (+13%), driven by acquisitions and resilient core business operations.

• Germany now represents 23% of gross profit, growing double-digit, driven by successful integration of Placetel and STARFACE acquisitions; gross profit up 197% to £78.4m.

• U.K. SME segment remained flat year-over-year, excluding the one-off PSTN switch-off impact, amid challenging macro conditions and restructuring.

• Service provider business expanded internationally, now capable of operating in 30 countries, with sales teams established in APAC.

• Enterprise segment saw a strong Q4 and notable contract wins (Bosch, Morrisons, RAC), building a solid pipeline for 2026.

Financial highlights

• Adjusted EBITDA reached £141.7 million (up from £95.4 million four years ago); adjusted EPS at 94.5p, within guidance.

• Gross profit up 16% year-over-year to £348.2m; gross profit margin increased to 54%, driven by high-margin German acquisitions.

• 89% of revenue is recurring; cash conversion at 93% (£131.8 million), net debt at £(9.3)m.

• Shareholder returns included £64.0m returned via £45.1m share buyback and a 14% increase in dividend (22.2p total for 2025).

• CapEx at £24.3 million (3.8% of revenue), with guidance to remain capital-light.

Outlook and guidance

• Confident in 2026 outlook, tracking within adjusted EBITDA guidance range of £138–144.6 million and adjusted EPS of 90–96.6p.

• Expect continued double-digit growth in Germany and international expansion for service provider and enterprise segments.

• U.K. SME growth constrained by macro and PSTN switch-off, with a ~£4m impact in 2026, but anticipated to recover post-2027.

• Operational efficiencies from UK restructuring to deliver £7m annual savings from FY2026.

• Committed to £42.5 million annual share buybacks in 2026 and 2027, with dividends held flat at 22.2p.