Redcentric (RCN) H1 25/26 earnings summary

Executive summary

• Strategic focus shifted to the MSP business, with the DC business sale agreed for up to £127m and completion expected by Q1 2026.

• New CEO and CFO appointed in H1 FY26, driving a refreshed MSP growth strategy centered on cybersecurity, public sector cloud, partner ecosystems, and operational efficiency.

• The DC sale is expected to be transformational, reducing leverage, enabling capital returns to shareholders, and supporting a potential dividend or share buyback.

• H1 FY26 marked by business unit separation and DC sale process.

Financial highlights

• MSP revenue decreased to £66.8m from £69.2m year-over-year; recurring revenue rose to 90.4% from 88.0%.

• MSP gross profit increased to £41.1m (61.6% margin) from £40.9m (59.1%).

• Adjusted EBITDA for MSP rose to £9.1m (13.7%) from £8.9m (12.8%).

• For total operations (MSP + DC), revenue was £83.6m (down from £86.8m), adjusted EBITDA £17.4m (down from £18.2m), and gross margin improved to 60.5%.

• Combined adjusted net debt flat at £41.9m; reported net debt at £68.6m.

Outlook and guidance

• Enhanced MSP growth strategy approved, targeting revenue in line with FY25 and improved cost management.

• Board expects flat MSP revenues for FY26 due to business unit separation and DC sale distractions.

• Post-DC sale, expect strong cash generation, reduced capex, and lower finance costs.

• Significant capital return to shareholders and material debt reduction anticipated after DC sale completion.

• Enhanced MSP strategy aims for revenue and earnings growth from FY27 onward.