FINEOS (FCL) H1 2025 earnings summary

Executive summary

• Subscription revenue grew 5.7% to €36.4 million, now 54.3% of total revenue, with total revenue up 4.2% to €67.1 million, driven by growth in North America and APAC.

• EBITDA increased 80.1% to €13.1 million, with margin rising to 19.6%, and gross profit reached €51.4 million, up 8.4% year-over-year with a margin of 76.6%.

• Free cash flow rose to €15.1 million, up from €6.1 million in the prior year period, and cash reserves increased to €34.9 million.

• Net loss after tax reduced to €1.3 million from €5.3 million loss in the prior year, with basic loss per share improving to 0.37 cents.

• The business remains focused on cloud-based software for insurance and employee benefits, with ongoing client migrations and a solid new business pipeline.

Financial highlights

• Annual recurring revenue (ARR) increased 11.2% to €76.4 million as of June 30.

• Gross margin was 76.6%, up from 73.6% year-over-year.

• EBITDA margin improved to 19.6%, up from 11.3% year-over-year.

• Net cash from operations increased 73% year-over-year to €34.3 million.

• Operating expenses decreased by 4.7% year-over-year, with notable reductions in sales & marketing and G&A.

Outlook and guidance

• FY25 revenue is guided to the lower end of €138m–€143m due to FX headwinds and global economic concerns.

• Positive free cash flow expected for FY25, with sustained annual profitability from FY26 onward.

• Recurring revenue targeted at 65%+ by FY27 and 75%+ by FY29; gross margin at 75% in FY27 and 80% in FY29; EBITDA margin at 25% in FY27 and 40% in FY29.

• R&D as a percentage of revenue targeted to decrease to 30% by FY27 and 25% by FY29 (currently 37%).

• FY25 costs expected to decrease compared to last year, benefiting from a weaker USD.