Redcentric (RCN) H2 24/25 earnings summary

Executive summary

• Two distinct business units, MSP and DC, have been separated following multiple acquisitions, each requiring different operating models and investment profiles.

• Strategic focus is now on the MSP business, which generates high recurring revenue (~90%) and has a loyal customer base.

• Decision made to sell the DC business unit; discussions with potential buyers are at an advanced stage.

• FY25 was a strong year, driven by power savings, infrastructure decommissioning, and increased VMware licensing sales.

Significant events and developments

• New CEO and CFO appointed in H1 FY26, bringing extensive sector experience.

• Board composition strengthened with new Non-Executive Chairman and NED.

• Legal formation of separate DC and MSP units completed, with infrastructure and contracts being separated.

• Lazard appointed as advisor for the DC business sale; transaction with preferred buyer is well progressed.

Financial highlights

• MSP revenue increased 8.3% year-over-year to £135.1m; recurring revenue rose to 89.3%.

• MSP gross profit grew to £83.3m (61.6% margin); adjusted EBITDA rose to £18.8m (13.9% margin).

• DC revenue decreased to £44.6m, but adjusted EBITDA increased 51.8% to £16.6m due to reduced power costs.

• Cash generated from operations increased 30% to £29.8m; net debt reduced to £41.9m.