Gamma Communications (GAMA) H1 2025 earnings summary

Executive summary

• Revenue grew 12% year-over-year to £316.6m, with adjusted EBITDA up 14% to £70.9m and adjusted EPS up 13% to 47.9p, driven by strong German performance and recent acquisitions such as Starface and Placetel.

• Maintained a market-leading position in the UK and Germany, with 90% recurring revenue and a consistent gross margin above 50%.

• Upgraded full-year EPS guidance, now expecting to exceed the top end of the consensus range.

• Returned over £60m to shareholders through dividends and share buybacks, while maintaining a balanced capital allocation approach.

• Profit before tax fell 10% to £43.5m due to £7.3m in exceptional costs, mainly from the Starface acquisition and Main Market listing.

Financial highlights

• Recurring revenue reached 90% of total, at £285.3m.

• Gross profit margin improved to 54.3%, led by high-margin German cloud business.

• Adjusted cash generated by operations was £63.7m, with a strong 90% adjusted cash conversion.

• Net debt position of £21.6m after Starface acquisition, well within £130m revolving credit facility.

• Interim dividend up 14% to 7.4p per share for the half-year; £45.1m share buyback completed.

Outlook and guidance

• Full-year 2025 adjusted EBITDA guidance of £139.4m–£143.1m; adjusted EPS expected to be slightly above 93.9p.

• CapEx for 2025 guided at £21–24m, up due to Starface capitalization.

• UK restructuring to deliver £6–8m annual savings from FY26, with a £3m exceptional restructuring cost in 2025.

• Identified £6m gross profit headwind in 2026 from PSTN and connectivity changes, offset by £6–8m in UK operational efficiencies.

• Confident in long-term growth drivers, including AI, new product variants, and international expansion.