Redcentric (RCN) H1 24/25 earnings summary

Executive summary

• Achieved significant improvements in all key profit measures, reflecting successful acquisition integration and synergy realization, with full benefits from FY22 and FY23 acquisitions.

• Fully integrated Sungard and other recent acquisitions, delivering anticipated cost savings.

• Operational focus included organic growth, efficiency improvements, data centre upgrades, and business unit separation.

• Data centre and Managed Services businesses will be reported separately for greater transparency and focus.

Financial highlights

• Revenue rose 6% year-over-year to £86.8m, with recurring revenue up 5% to £78.3m (90% of total) and non-recurring revenue up 18% to £8.5m.

• Gross profit increased 12% to £50.6m, with gross margin up to 58.3%, driven by electricity cost savings.

• Adjusted EBITDA up 25% to £18.2m, margin improving to 21% from 18%.

• Adjusted EPS rose 90% to 2.8p, with reported basic EPS at 2.43p (from -0.14p).

• Net profit after tax improved to £3.8m from a loss of £0.2m year-over-year.

Outlook and guidance

• H2 FY25 expected to be broadly flat in revenue and gross profit, but with improved profit from £0.9m cost savings.

• Full-year revenue projected up ~7%, with adjusted EBITDA exceeding 30% growth over FY24.

• Data centre upgrade programs to complete in FY26, with capex normalizing thereafter.

• Sales pipeline recovering post-political events, with cautious optimism for next year.