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(Sharecast News) - Microlise reported higher full-year revenue and strong cash generation on Thursday, but profits fell as weaker OEM demand and delayed contract wins weighed on margins.
The AIM-traded transport management software provider said revenue for the year ended 31 December 2025 rose 6% to 84.0m, while adjusted revenue, excluding revenue reversals linked to a cyber security incident expected to be covered by insurance, increased 3.7% to 84.0m.
Recurring revenue rose 11% to 58.8m, while adjusted recurring revenue grew 8%.
Adjusted EBITDA fell 27% to 8.3m, with the adjusted EBITDA margin narrowing to 9.9% from 14.0%.
Adjusted profit before tax declined 59% to 2.7m, partly reflecting lower operating profit and increased amortisation from continued technology investment, including the rollout of the Microlise One platform.
On a statutory basis, the company reported an operating loss of 2.4m, compared with a 2.3m loss a year earlier, while loss before tax widened to 2.5m from 2.3m.
Basic losses per share were 1.87p, compared with 1.77p in 2024.
Microlise said adjusted cash generated from operations increased 29% to 13.3m.
Cash and cash equivalents rose 47% to 16.7m, and the group retained a 30m undrawn debt facility with HSBC.
The board proposed a final dividend of 1.30p per share, up from 1.24p, in line with its progressive dividend policy.
Annual recurring revenue increased to 59.2m from 56.6m, supported by the group's subscription-based model.
Direct customer ARR rose 12.1% to 44.2m, driven by record order intake and momentum in Australia and France, although growth was held back by managed churn of smaller acquired customers and reduced OEM activity.
Net revenue retention for direct customers was 108%, compared with 113% a year earlier, with churn remaining low at 1.4%.
Microlise added 417 new customers during the year, up from 375 in 2024, and said existing customers continued to adopt higher-value modules.
The group said it delivered 5m of annualised cost savings through restructuring at the end of 2025, supporting future margin expansion.
It also expanded the Microlise One platform, including API integrations with vehicle refrigeration.
Trading in the first quarter of 2026 was in line with board expectations, supported by expansion within existing enterprise customers and increased adoption of the company's transport management system module.
However, Microlise said it continued to expect OEM customer revenue in 2026 to be below 2025 levels.
Following the appointment of a new chief technology officer and a review of its product roadmap, the board said it had decided to accelerate investment in products, cloud infrastructure and go-to-market teams.
The programme would include upgrades to its cloud platform architecture, investment to accelerate implementation of the TMS module and development of its mid-market proposition.
As a result of that investment and a challenging market environment, Microlise said it expected 2026 revenue to be slightly below current market expectations, with adjusted EBITDA at the lower end of the consensus range.
Chief executive Nadeem Raza said Microlise had delivered "a resilient performance in FY25" despite weaker OEM demand and a tougher market backdrop.
"Looking ahead, 2026 will be an important investment year for Microlise as we deliberately allocate capital behind the areas of the business where we see the strongest long-term growth opportunity," he said.
"These actions are a clear reflection of our direction of travel: to build a more scalable, higher-quality and higher-margin business, with the benefits of this investment expected to support growth in 2027 and beyond."
At 1018 BST, shares in Microlise Group were down 15.52% at 49p.
Reporting by Josh White for Sharecast.com.
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