Araxi (AXX) H1 2025 earnings summary

Executive summary

• Revenue increased 10.4% year-over-year to R611.5 million, driven by strong Payments division growth and resilient annuity income streams, while Software faced project delays and contract expiries but showed signs of recovery post-elections.

• EBITDA declined 3.1% to R113.8 million, with margin contraction due to underutilised Software resources and delayed project starts.

• Cash at hand was R419.7 million at November 2024, supporting future organic and acquisitive growth.

• Dividend increased by 5.9% to 4.50 cents per share, marking the eighth consecutive annual increase.

Financial highlights

• Payments division revenue rose 18.5% to R314.3 million, with terminal sales up 26%, rental income up 70%, and annuity income now 56% of payments revenue.

• Software division revenue grew 2.4% to R295.2 million, with South African revenue up 9.7% but international revenue down 19%; EBITDA down 81% due to project delays and underutilisation.

• Group gross margin contracted to 46.3% from 49.3% year-over-year; EBITDA margin at 18.6% versus 21.2%.

• Headline earnings decreased by 7.2% to R74.8 million; EPS and HEPS both declined 8.3% to 5.94 and 5.96 cents, respectively.

• Cash generated from operations was R11.6 million, impacted by working capital build-up, with R93 million inflow post-period.

Outlook and guidance

• Strong H2 expected as unfulfilled orders and new contracts in Payments are executed, with regulatory-driven terminal upgrades anticipated.

• Software division pipeline improving post-elections, with optimism for EBITDA recovery in H2'25 and FY2026.

• Management remains cautiously optimistic for both divisions, focusing on organic and acquisitive growth amid a challenging macroeconomic environment.